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190?, 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


BY-LAWS 


OF 


PRIVATE     CORPORATIONS 


BY 


LOUIS  BOISOT 

OF  THE  CHICAGO  BAR 


SECOND  EDITION 


ST.  PAUL,  MINN. 

KEEFE  DAVIDSON  COMPANY. 


Copyright,  1902, 
By  LOUIS  BOISOT. 


T 


WKBH  PUBLISHING  CO.  PBBSS,  ST.  PAUL,  MINN. 


^ 

•^ 

^ 

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Digitized  by  tine  Internet  Arciiive 

in  2007  witii  funding  from 

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littp://www.arcliive.org/details/bylawsofprivatecOOboisiala 


PREFACE. 


The  law  pertaining  to  by-laws  has  nevw,  I  believe,  been 
made  the  subject  of  any  other  book  except  Luniley  on  By- 
Laws,  and  that  work  is  exclusively  English,  and  has  little 
if  anything  to  say  in  regard  to  the  by-laws  of  private  cor- 
porations, being  concerned  with  the  ordinances  of  munici- 
pal or  quasi  municipal  corporations.  In  the  present  work, 
I  have  confined  myself  to  the  subject  of  by-laws  of  pri- 
vate corporations  and  associations.  When  I  have  ventur- 
ed somewhat  beyond  the  scientific  limits  of  the  subject,  it 
has  been  with  a  view  to  rendering  the  work  more  useful 
to  mutual  insurance  and  building  and  loan  associations. 

The  general  by-laws  found  in  the  Appendix  are  mainly 
framed  from  those  which  the  author  has  had  occasion  to 
draw  from  time  to  time  for  the  use  of  clients.  As  stfited 
in  the  Appendix,  these  forms  must  be  taken  rather  as  sug- 
gestions than  as  models,  since  no  one  set  of  by-laws  can  be 
so  framed  as  to  be  suitable  for  all  corporations. 

In  this  edition  there  has  been  also  inserted  in  the  Appen- 
dix copies  of  the  by-laws  of  two  of  our  great  industrial  cir- 
porations, — the  Standard  Oil  Company  and  the  Federal 
Steel  Company. 

The  nine  years  that  have  passed  since  the  first  edition 
of  this  work  was  published  have  been  so  fruitful  in  cor- 
poration decisions  that  I  have  been  able  to  double  the 
number  of  citations  to  adjudicated  cases. 

LOUIS  BOISOT. 

Chicago,  111.,  Sept.,  1901. 


TABLE  OF  CONTENTS. 


CHAPTER  I. 

NATURE   OF   BY-LAWS. 

1.  Definition. 

2.  Distinguished   from   ordinances. 

3.  Binding  effect. 

4.  Distinguislied   from   resolutions. 

5.  Distinguished    from    regulations. 

6.  Incidental  to   corporate  existence. 

7.  Scope  limited  by  necessity. 

8.  Offlco. 


CHAPTER  II. 

FORM    AND    ENACTMENT. 

}  9.  Writing  unnecessary. 

10.  Writing  advisable. 

11.  How  adopted. 

12.  Informalities  disregarded. 

13.  Ratification. 

14.  Quorum. 

15.  Persons  present  and   not  voting. 

16.  Adoption   outside   state — Implied    adoption. 

17.  Amendment. 

18.  Express  repeal. 

19.  Implied  repeal. 

20.  Waiver — Provision    in   by-law    against   waiver. 


viii  CONTENTS. 

21.  Same — By-law  relating  to   transfer  of  stock. 

22.  Same — Same. 

23.  Same — By-law    relating   to   term   of   officers. 

24.  Same^— By-law   relating  to   powers   of  corporation, 

25.  Same — By-law   relating  to   admission   of   member. 

26.  Waiver   by   insurance   companies — By-law   as   to   proof   of   ior 

surance  loss. 

27.  Same — Same. 

2S.  Same — By-law  as  to   designation   of  beneficiary. 

29.  Same — By-law  as  to  payment  of  assessments. 


CHAPTER  III. 

SUBJECT-MATTER    OF    BY-LAWS. 
General  Principles. 

§  30.  General   requisites — Conformity   to   law. 

31.  Same — Conformity  to  charter. 

32.  Same — Reasonableness. 

33.  Same — Appropriateness, 

34.  Conformity  to  law. 

35.  Same — Violation  of  statute, 

36.  Same — Modification   of   common-law    rights. 

37.  Same — Extension   of   statutory   rights. 

38.  Conformity  to  charter, 

39.  Same. 

40.  Reasonableness, 

41.  Same. 

42.  Same — Illustrations  of  reasonable  by-laws. 

43.  Same — Illustrations   of    unreasonable    by-laws. 

44.  Appropriateness. 

45.  Same — Illustrations, 

Regulation  of  Particular  Subjects. 

§  46.     Duties  of  officers. 

47.  Same. 

48.  Same. 


CONTENTS. 

49.  Meetings  and  elections. 

50.  Same — Notice. 

51.  Same — Unautliorized  meetings. 

52.  Same — 'Votes  and  proxies. 

53.  Same — Quorum. 

54.  Assessments  and  dues. 

55.  Same — Reasonableness. 

56.  Transfer  of  stock. 

57.  Same — Irregular  transfers. 

58.  Same — Same. 

59.  Same — Restriction  of  tran.sfer. 

60.  Same — ^Regulating  manner   of   transfer. 

61.  Creation  of  lien  on  stock. 

62.  Same — Operation  of  by-law. 

63.  Same — Scope  of  lien. 

64.  Same — Validity  of  by-law. 

65.  Same — Banking  corporations. 

66.  Retiring  or  forfeiting  stock. 

67.  Issuing  preferred  stock. 

68.  Affecting  rights  of  members. 

69.  Same — Suspension  of  members. 

70.  Same — Limiting  right  to  benefit,  and   restricting  suits. 

71.  Same — Expulsion  of  subordinate  lodge. 

72.  Private  affairs  of  members. 

73.  Same — Individual  trade  by  members. 

74.  Same — Honesty  in   individual   dealings. 

75.  Same — Requirement   of   arbitration   between   members. 

76.  Restraint  of  trade. 

77.  Same. 

78.  Same — Competition    between    exchange    and    its   members. 

79.  Penalties. 

80.  Same — Reasonableness. 

81.  Same — Building  and  loan  societies. 

82.  Same — Same. 

83.  Same — Collection  of  fines. 

84.  Same — Expulsion. 

85.  Same — Same. 

86.  Same — For  nonpayment  of  dues. 

/ 


ix 


X  CONTENTS. 

CHAPTER  IV. 

CONSTRUCTION  OF  BY-LAWS. 

General  Principles. 

§  87.     Rules  of   statutory   construction   applicable. 

88.  Question  of  law  or  fact. 

89.  Partial  invalidity. 

Pakhcilar  By-Laws  Construed. 

§  90.  Illustrations. 

91.  By-laws  relating  to  officers  and  agents. 

92.  By-laws  relating  to  meetings  and  elections. 

93.  By-laws  relating  to  dues  and  assessments. 

94.  By-laws   relating  to  designation   of  beneficiary. 

95.  By-laws  relating  to  benefits  and  loans. 


CHAPTER  V. 

EFFECT    OF    BY-LAWS. 
On  the  Corporation. 

§     96.  Application  to  corporation. 

97.  Same. 

98.  Rights  under  waiver  by  law. 

99.  Same. 

100.  Estoppel  to  urge. 

101.  Effect  of  violation. 

102.  Same — Not  ground  for  dissolution. 

On  the  Directors. 

§  103.     Right  to  waive. 

104.  Violation. 

105.  By-laws  regulating  powers. 

On  the  Officeks. 

§  106.     Application  to  officers. 
107.     Effect  of  violation. 


CONTENTS.  xi 

Oh  the  Stockholders  or  Members, 

§  108.  Application  to  stockholders  and  members. 

109.  Same. 

110.  Same. 

111.  Waiver. 

112.  Estoppel  to  attack. 

113.  Same. 

114.  Effect  of  violation. 

115.  Same. 

116.  Conduct  of  meetings. 

117.  Transfer  of  stock. 

118.  Changes  in  by-laws. 

119.  Same — Changes  held   valid. 

120.  Same — Changes  held  invalid. 

121.  Same — By-laws  as  part  of  member's  contract. 

122.  Pime — Reservation  of  right  to  amend. 

123.  Same — Lawful   and    reasonable   amendments   only. 

124.  Same — 'Impairment  of  contract  not   allowed. 

125.  Same — Membership     rights     and     insurance     rights    distin- 

guished. 

126.  Same — Reservations  upheld. 

127.  Same — Slight  changes. 

128.  Same — Vested  rights. 

129.  Same — What  are  vested  rights. 

130.  Same — Same. 

131.  Same — Acquiescence   and    beneficial   alterations. 

On  Third  Persons. 

§  132.  Not  binding  on  strangers. 

133.  Illustrations. 

134.  Implied  assent  sufficient. 

135.  Who  is  stranger. 

136.  What  is  implied  notice. 

137.  Limitations  of  power  of  officers. 

138.  The  rule  in  New  York. 

139.  The  rule  in  Massachusetts — Bona  fide  dealers  not  affected. 

140.  The  rule  in  Illinois — Same. 

141.  Assignment  of  shares  contrary  to  by-law. 


CONTENTS. 

142.  Rights  of  creditors. 

143.  Rights  of  third  persons  under  by-laws. 

144.  Right  to  attack  by-laws. 

145.  Beneficiary  bound  by  by-law. 

146.  Involuntary  relation  to  corporation. 


CHAPTER  VI. 

ENFORCEMENT   OF    BY-LAWS. 

147.  Right  to  provide  penalty. 

148.  Recovery  of  penalty. 

149.  Double  punishment. 

150.  Self-executing  by-laws. 

151.  Interference  by  courts.  ' 

152.  Same — Corporate  tribunals. 

153.  Same — When  expulsion  will  be  reviewed. 


CHAPTER  VII. 

NECESSITY    OF    BY-LAWS. 

§  154.  By-laws  a  practical  necessity. 

155.  Validity  of  acts  in  the  absence  of  by-laws. 

156.  Same. 

157.  By-laws  should  be  adopted. 


BY-LAWS 

CHAPTER  I. 
NATURE  OF  BY-LAWS. 

§  1.  Definition. 

2.  Distinguished  from  ordinances. 

3.  Binding  effect. 

4.  Distinguished  from  resolutions. 

5.  Distinguished  from  regulations. 

6.  Incidental  to  corporate  existence.  . 

7.  Scope  limited  by  necessity. 

8.  Offlce. 

Definition. 

§  1.  By-laws  have  been  defined  as  regulations,  ordi- 
nances, or  rules  enacted  by  a  private  corporation  for  its 
own  government.^  The  term  "by-law"  is  sometimes  ap- 
plied to  the  regulations  of  municipal  as  well  as  of  private 
corporations,^  though  the  former  are  more  generally  de- 
nominated "ordinances."    The  constitution  of  a  voluntary 

1  Ehumaker's  Law  Diet,  sub  nom  "By-Lews."  Sea  Commonwealth  v. 
Turner  (1848)  1  Cush.  (Mass.)  493.  "A  by-law  is  a  permanent  and  con- 
tinuing rule  for  the  goTernment  of  the  corporation  and  Its  officers." 
North  Milwaukee  Town  Site  Co.,  No.  21,  r.  Bishop  (1899)  103  Wis.  492. 
79  N.  W.  785. 

s  Such  Is  the  uniform  English  practice. 

(1). 

Boisot  By  Laws — 1. 


§     2  BY-LAWS.  [Ch.  1 

association  or  corporation,  as  distinguished  from  its  char- 
ter, is  really  a  by-law  under  an  inappropriate  name.' 
Hence  the  constitution  of  a  mutual  benefit  society,  form- 
ing no  part  of  its  charter,  cannot  deprive  the  lawfully 
constituted  authorities  of  the  corporation  of  their  inherent 
power  to  adopt  such  other  by-laws  as  the  charter  permits.* 

Distinguished  from  ordinances. 

§  2.  The  distinction  between  the  ordinances  of  a  mu- 
nicipal corporation  and  the  by-laws  of  a  private  corpora- 
tion is  as  marked  and  fundamental  as  the  distinction 
between  the  two  classes  of  corporations  themselves.  The 
ordinances  of  a  municipal  corporation  bind  all  those  who 
happen  to  be  within  the  territorial  limits  of  its  jurisdic- 
tion, whether  they  are  corporators  or  strangers,  and 
whether  they  have  assented  to  such  ordinances  or  not ;  but 
the  by-laws  of  a  private  corporation  derive  their  force  from 
assent,  either  actual  or  constructive,  and  are  binding  upon 
no  one  except  those  who  have  in  some  way,  either  directly 
or  indirectly,  promised  to  obey  them.* 

•  Supreme  Lodge,  K.  of  P.,  v.  Knight  (1889)  117  Ind.  495.  20  N.  B. 
479;  Supreme  Lodge,  K.  of  P.,  v.  Kutscher  (1899)  179  111.  340,  53  N.  E. 
620;  Domes  t.  Supreme  Lodge,  K.  of  P.  (1898)  75  Miss.  466.  23  So. 
191.  But  see  In  re  Skandinaviska  (1894)  3  Pa.  Dist  Rep.  235.  And 
in  a  recent  case  the  supreme  court  of  Illinois  intimates  that  there  may 
be  a  distinction  between  constitutional  provisions  and  by-laws.  People 
V.  Women's  Catholic  Order  of  Foresters  (1896)  162  111.  78,  44  N.  E.  401. 

*  Supreme  Lodge,  K.  of  P.,  v.  Kutscher  (1899)  179  111.  340,  53  N.  E. 
620;  Supreme  Lodge,  K.  of  P.,  v.  Trebbe  (1899)  179  111.  348,  53  N.  E. 
730;  Richardson  v.  Union  Congregational  Soc.,  58  N.  H.  188. 

8  Black  &  White  Smith's  Soc.  v.  Vandyke  (1836)  2  Whart  (Pa.)  311; 
Cudden  y.  Estwick  (1704)  6  Mod.  124:  Bank  of  Holly  Sprincs  v.  Pia- 

(2) 


Ch.  1]  NATURE  OF  BY-LAWS.  §  4 

Binding  effect. 

§  3.  What  the  constitution  is  to  the  state,  its  charter  is 
to  a  corporation;  what  acts  of  the  legislature  are  to  the 
citizens  of  a  state,  the  by-laws  of  a  corporation  are  to  its 
stockholders.  A  valid  by-law  is  as  much  a  law  of  a  cor- 
poration as  the  charter  is.®  It  is  an  act  of  private  legisla- 
tion, and,  when  properly  adopted,  and  not  contrary  to  law 
and  public  policy,  is  binding  upon  the  corporation  and 
its  members,  however  inconvenient  or  embarrassing  its 
effects  may  be."^  Thus  it  has  been  said  that  the  by-laws  of 
a  corporation,  made  in  pursuance  of  its  charter,  are  clearly 
as  binding  on  all  its  members  as  any  public  law  of  the 
state.^ 

Distinguished  from  resolutions. 

§  4.  A  by-law  may  be  in  the  form  of  a  resolution,®  but 
a  resolution  is  not  necessarily  a  by-law.^°  Thus,  a  mere 
resolution  of  the  directors  in  reference  to  a  particular  case, 
and  not  of  general  application,  does  not  constitute  a  by- 
law ;^^  and  where  a  statute  of  incorporation  provides  that 
the  by-laws  shall  be  in  writing  and  under  the  corporate 

son  (1880)  58  Miss.  435;  Morgan  v.  Bank  of  North  America  (1822)  8 
Serg.  &  R.  (Pa.)  88,  11  Am.  Dec.  575. 

6  Kent  V.  Quicksilver  Mining  Co.    (1879)   78  N.  Y.  179. 

TWeatherly  v.  Medical  &  Surgical  Soc.  (1884)  76  Ala.  567. 

sCummings  v.  Webster  (1857)  43  Me.  197. 

»  Domes  v.  Supreme  Lodge,  K.  of  P.  (1898)  75  Miss.  466,  23  So.  191. 

"Drake  v.  Hudson  River  R.  Co.  (1849)  7  Barb.  (N.  Y.)  539;  Budd 
V.  Multnomah  Street  Ry.  Co.  (1887)   15  Or.  413. 

11  Budd  V.  Multnomah  St  R7.  Co.  (1887)  15  Or.  413. 

(3) 


BY-LAWS. 


[Ch.  1 


seal,  a  resolution  passed  at  a  general  meeting,  and  not 
reduced  to  writing,  is  not  a  by-law.^^ 

Distinguished  from  regulations. 

§  5.  The  distinction  between  by-laws  and  mere  regula- 
tions for  the  conduct  of  a  corporation's  business  is  one 
that  it  is  sometimes  difficult  to  draw,  and  the  two  are 
often  confounded.  By-laws  are  intended  to  control  the 
action  of  the  corporation;  they  are  usually  in  writing, 
and  are  adopted  by  the  corporation  or  its  board  of  di- 
rectors. Regulations,  on  the  other  hand,  are  intended  to 
control  the  conduct  of  those  dealing  with  the  corpora- 
tion, or  of  its  employes.  They  are  often  not  reduced  to 
writing,  and  are  frequently  proclaimed  by  the  officers  of. 
the  corporation  on  their  own  authority. 

Incidental  to  corporate  existence. 

§  6.  The  right  to  enact  by-laws  as  a  private  constitu- 
tion for  their  government  is  incidental  to  all  corporations 
aggregate  ;^^  and  it  has  been  said  that  corporations  have 
exercised  this  right  ever  since  the  time  of  the  Roman  law 

12  Dunston  v.  Imperial  Gas  Light  &  C.  Co.  (1831)  3  Barn.  &  Adol.  125. 

isLeggett  y.  New  Jersey  M.  &  B.  Co.  (1832)  1  N.  J.  Eq.  541;  People 
T.  Throop  (1834)  11  Wend.  (N.  Y.)  186;  Cunningham  v.  Alabama  Life 
Ins.  &  T.  Co.  (1843)  4  Ala.  654;  Came  v.  Brigham  (1854)  39  Me.  38; 
People  T.  Medical  Soc.  (1857)  24  Barb.  (N.  Y.)  574;  Anacosta  Tribe 
T.  Murbach  (1858)  13  Md.  94;  Supreme  Commandery  v.  Ainsworth 
(1882)  71  Ala.  445;  Taylor  v,  Griswold  (1834)  14  N.  J.  Law,  227;  Rex 
V.  Westweod  (1830)  2  Dow.  &  C.  21,  4  Bligh  (N.  S.)  213,  7  Bing.  1; 
People  Y.  Burnham  Hospital  (1896)  71  111.  App,  246;  Bngelhardt  v. 
Fifth  Ward  P.  D.  S.  &  L.  Ass'n  (1896)  148  N.  Y.  286,  42  N.  E.  710; 
State  T.  Bank  of  Louisiana  (1827)  5  Mart.  (N.  S.;  La.)  327,  344. 

(4) 


Ch.  1]  NATURE  OF  BY-LAWS.  §  7 

of  the  Twelve  Tables.^*  Usually  the  power  to  pass  by- 
laws is  specified  in  the  charter  or  statute  of  incorporation, 
but  even  where  they  are  silent,  a  corporation  has  the 
implied  power  to  make  by-laws  as  incident  to  its  right 
to  manage  and  control  its  own  affairs.  But  where  the 
statute  or  charter  gives  the  corporation  power  to  make 
by-laws  for  certain  specified  purposes,  it  can  enact  none 
for  any  other  purpose.^* 

Scope  limited  by  necessity. 

§  7.  As  by-laws  are  necessary  for  conducting  the  busi- 
ness of  corporations,  the  scope  of  such  by-laws  is  meas- 
ured by  their  necessity.  A  corporation,  therefore,  cannot 
make  a  by-law  in  regard  to  a  matter  over  which  the  cor- 
poration has  no  control,^^  and  if  the  subject  of  a  by-law  is 
clearly  alien  to  the  nature  of  the  corporation,  and  is  a 
departure  from  its  purpose,  such  a  by-law  is  ultra  vires 
and  void.^'^  By-laws,  to  be  valid,  must  be  general  and  aj)- 
ply  to  all  members  alike.^^  They  must  be  certain  and 
must  operate  equally  on  all  within  the  sphere  of  their 

"Taylor,  Priv.  Corp.  §  7;  1  Bl.  Comm.  *476. 

15  Child  V.  Hudson's  Bay  Co.  (1723)  2  P.  Wms.  208;  State  v.  Fergu- 
son (1856)  33  N.  H.  424;  Ireland  v.  Globe  M.  &  R.  Co.  (1895)  19  R.  I.  ISO, 
32  Atl.  921. 

16  Company  of  Homers  v.  Barlow  (1688)  3  Mod.  159;  Kolff  v.  St. 
Paul  Fuel  Exchange  (1892)  48  Minn.  215,  50  N.  W.  1036;  Crumpton  v. 
Pittsburg  Council,  No.  117  (1896)  1  Pa.  Super.  Ct.  613,  38  Wkly.  Notes 
Cas.  335.     See  post,  §  44. 

17  People  V.  Chicago  Board  of  Trade  (1867)  45  111.  118;  Taylor  v. 
Griswold  (1834)  14  N.  J.  Law,  227. 

18  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc,  No.  1  (1879) 
41  Mich.  67;  Budd  v.  Multnomah  Street  Ry.  Co.  (1887)  15  Or.  418. 

(5) 


S  8  BY-LAWS.  [Ch.  1 

operation.^®  They  must  stand  on  their  own  validity,  and 
not  on  any  special  dispensation  granted  to  particular 
members.  It  is  therefore  no  answer  to  a  member  who  com- 
plains of  an  illegal  by-law  to  say  that  he  has  been  exempted 
by  resolution  from  its  penalties.^" 

Office. 

§  8.  The  office  of  a  by-law  is  to  regulate  the  conduct 
and  define  the  duties  of  the  members  towards  the  corpora- 
tion and  between  themselves.  So  far  as  its  provisions  are 
in  the  nature  of  contracts,  the  parties  thereto  are  the 
members  of  the  association  as  between  themselves,  or  the 
corporation  on  the  one  side  and  its  individual  members 
upon  the  other.  The  right  of  any  third  party  to  establish 
a  legal  claim  through  such  a  by-law  must  depend  upon 
the  general  principles  of  law  applicable  to  express  con- 
tracts.^^ Although  by-laws  are  in  the  nature  of  contracts 
regulating  the  business  of  a  corporation,  yet  it  has  been 
said  that  what  might  very  well  be  made  the  subject  of 
contract  between  co-partners  might  not  be  good  as  a  by-law 
of  a  corporation.^^ 

By-laws  are  enacted  for  the  government  of  a  going  con- 

loGoddard  v.  Merchants'  Exchange  (1880)  9  Mo.  App.  295;  Balti- 
more B.  &  L.  Ass'n  V.  Powhatan  Imp.  Co.  (1898)  87  Md.  59,  39  Atl. 
274;  Wierman  v.  International  B.  L.  &  I.  Union  (1896)  67  111.  App. 
550;  Domes  v.  Supreme  Lodge,  K.  of  P.  (1898)  75  Miss.  466,  23  So. 
191.     See  post,  c.  3,  §§  4,  5. 

20  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc,  No.  1  (1879) 
41  Mich.  67,  1  N.  W.  931,  6  Am.  Orp.  Cas.  626. 

21  Flint  V.  Pierce  (1868)  99  Mass.  70. 
22Adley  v.  Whitstable  Co.   (1810)   17  Ves.  315. 

(C) 


Ch.  1]  NATURE  OF  BY-LAWS.  §  8 

cern,  and  necessarily  cease  to  operate  when  the  association 
becomes  insolvent.^^  It  has  been  held  in  New  York  that, 
where  the  statute  declares  that  the  stock  shall  be  trans- 
ferable in  such  manner  as  may  be  agreed  on  in  the  articles 
of  association,  a  corporation  cannot  regulate  the  transfer 
by  by-law.^* 

28  Chapman  v.  Young  (1895)  65  111.  App.  131. 

2*  Bank  of  Attica  v.  Manufacturers'  &  Traders'  Bank  (1859)   20  N. 
Y.  501. 

(7) 


CHAPTER  II. 

FORM  AND  ENACTMENT. 

§    9.  Writing  unnecessary. 

10.  Writing  advisable. 

11.  How  adopted. 

12.  Informalities  disregarded. 

13.  Ratification. 

14.  Quorum. 

15.  Persons  present  and  not  voting. 

16.  Adoption  outside  state — Implied  adoption. 

17.  Amendment. 

18.  Express  repeal. 

19.  Implied  repeal. 

20.  Waiver — Provision  in  by-law  against  waiver. 

21.  Same — By-law  relating  to  transfer  of  stock. 

22.  Same — Same. 

23.  Same — By-law  relating  to  term  of  ofiicers. 

24.  Same — By-law  relating  to  powers  of  corporation. 

25.  Same — By-law  relating  to  admission  of  member. 

26.  Waiver  by  insurance  companies — By-law  as  to  proof  of  insur- 

ance loss. 

27.  Same! — Same. 

28.  Same — By-law  as  to  designation  of  beneficiary. 

29.  Same — By-law  as  to  payment  of  assessments. 

Writing  unnecessary. 

§  9.  It  has  been  said  that  by-laws  need  not  be  in  writ- 
ing,— that  they  may  be  adopted  as  well  by  the  company's 
conduct  as  by  an  express  vote  at  a  meeting.^     But  though 

1  Bank  of  Holly   Springs  v.  Pinson   (1880)    58  Miss.   421;    State  v. 

(8) 


[Ch.   2  FORM  AND  ENACTMENT.  §  10 

by-laws  need  not  be  in  writing,  unless  the  statute  or  the 
charter  so  require,  but  may  be  adopted  by  long-continued 
and  invariable  custom,  yet  the  custom  itself  does  not  take 
the  place  of  a  by-law,  but  is  merely  evidence  that  such  a 
by-law  has  been  adopted.^  The  proof  of  the  adoption  of 
by-laws  need  not  be  in  writing ;  that  is,  there  need  not  be 
a  written  record  showing  their  adoption.^ 

Writing  advisable. 

§  10.  But  it  is  undoubtedly  a  better  plan  to  have  all 
by-laws  reduced  to  writing,  and  to  have  the  fact  of  their 
adoption  clearly  shown  by  the  records  of  the  corporation. 
Where  the  charter  or  statute  provides  that  by-laws  shall 
be  in  writing  under  the  corporate  seal,  resolutions  passed 
by  the  corporation  at  a  general  meeting,  but  not  reduced  to 
writing,  are  not  by-laws,^  and  under  such  a  statute,  by- 
laws written  in  the  corporate  records,  but  not  attested 
by  the  corporate  seal,  are  equally  invalid.^ 

It  seems  necessary  to  add  that  by-laws  should  be  clear 
and  concise,  for  the  courts  have  frequently  expressed  their 
impatience  with  the  prolix,  obscure  and  involved  provi- 
sions and  conditions  which  co-operative  associations  often 
incorporate  into  their  by-laws.^ 

Sllva  (1895)  130  Mo.  440,  32  S.  W.  1007;  Stafford  v.  Produce  Exchange 
Banking  Co.  (1898)  16  Ohio  Cir.  Ct.  50,  8  Ohio  Dec.  483. 

2  District  Grand  Lodge  v.  Cohn  (1886)  20  111.  App.  344. 

8  Union  Bank  v.  Ridgely  (1827)  1  Har.  &  G.  (Md.)  412. 

*Dunston  v.  Imperial  Gas  Light  &  C.  Co.  (1831)  3  Bam.  &  Adol.  125. 

e  McDonell  v.  Ontario,  S.  &  H.  R.  U.  Co.  (1854)  11  Up.  Can.  Q.  B.  267. 

«  Schultz  V.  Citizens'  Mut.  Life  Ins.  Co.  (1894)  59  Minn.  308,  61  N.  W 
331. 

(9) 


§  13  BY-LAWS.  [Ch.    2 

How  adopted. 

§  11.  Where  neither  the  articles  of  incorporation  nor 
the  general  statutes  confer  upon  the  directors  the  power 
of  enacting  by-laws,  such  power  can  only  be  exercised  by 
the  corporation  itself, — that  is,  by  the  stockholders  at  a 
stockholders'  meeting^  By-laws  passed  by  the  directors 
in  the  absence  of  any  authority  to  do  so  are  of  no  effect.* 
On  the  other  hand,  where  the  directors  are  invested  with 
the  power  of  passing  by-laws,  by-laws  passed  by  the  stock- 
holders are  not  binding.^ 

Informalities  disregarded. 

§  12.  But  in  such  cases,  the  courts  pay  attention  less 
to  form  than  to  substance.  Thus,  where  all  the  stock  of 
a  corporation  was  held  by  four  persons  who  were  the  offi- 

7  Morton  Gravel  Road  Co.  v.  Wysong  (1875)  51  Ind.  12;  State  Sav- 
ings Ass'n  V.  Nixon- Jones  Printing  Co.  (1887)  25  Mo.  App.  642;  Hughes 
T.  Wisconsin  Odd  Fellows'  Mut.  Life  Ins.  Co.  (1898)  98  Wis.  292,  73 
N.  W.  1015;  North  Milwaukee  Town  Site  Co.,  No.  2,  v.  Bishop  (1899) 
103  Wis.^492,  79  N.  W.  785;  Watson  v.  Sidney  F.  Woody  Printing  Co. 
(1894)  56  Mo.  App.  145;  United  Fire  Ass'n  v.  Benseman  (1877)  4 
Wkly.  Notes  Cas.  (Pa.)  1;  Thayer  v.  Herrick  (1876)  Fed.  Cas.  No.  13.- 
868.  A  statute  placing  the  affairs  of  corporations  under  the  manage- 
ment of  their  directors  does  not  give  the  directors  power  to  pass  by- 
laws. North  Milwaukee  Town  Site  Co.,  No.  2,  v.  Bishop  (1899)  103 
Wis.  492,  79  N.  W.  785. 

8  Carroll  v.  Mullanphy  Savings  Bank  (1880)   8  Mo.  App.  253. 

»In  re  Klaus  (1886)  67  Wis.  405,  In  has  been  held  in  England, 
however,  that  the  charter  of  a  municipal  corporation  giving  a  select 
body  the  power  to  make  by-laws  did  not  take  away  such  power  from 
the  general  body  of  corporators,  and  there  is  nothing  in  the  reason- 
ing of  the  opinion  to  limit  the  doctrine  to  municipal  corporations.  Rex 
V.  Westwood  (1830)  2  Dow.  &  C.  21. 
(10) 


Ch.  2]  FORM  AND  ENACTMENT.  §  13 

cers  and  managers  of  the  company,  and  the  charter  pro- 
vided that  the  directors  and  managers  might  adopt  by- 
laws, it  was  held  that  by-laws  adopted  by  such  four  per- 
sons were  valid,  although  the  meeting  at  which  they 
adopted  them  was  a  meeting  of  stockholders.^'*  And 
under  a  law  providing  that  by-laws  should  be  enacted  by 
the  stockholders,  a  code  of  by-laws  unanimously  adopted 
at  a  meeting  of  directors  was  held  to  be  regularly  adopted 
where  the  directors  owned  all  the  stock  of  the  corpora- 
tion.^^ The  rule  deducible  from  these  decisions  is  that, 
where  by-laws  are  adopted  by  persons  who  have  authority 
to  do  so,  it  does  not  matter  by  what  name  these  persons 
call  themselves. 

Ratification. 

§  13.  By-laws  informally  adopted  may  be  subsequently 
ratified,  and  although  there  is  no  record  of  adoption,  such 
ratification  may  be  proved  by  the  usage  and  acts  of  the 
corporation  and  parties  dealing  with  it.^^  Thus,  where 
the  only  by-laws  ever  adopted  by  a  corporation  are  found 
properly  recorded  on  the  books  kept  by  the  trustees,  and 
have  been  used,  acted  upon,  and  referred  to  as  by-laws  of 

10  People  V.  Sterling  Mfg.  Co.   (1876)   82  111.  460. 

11  State  Savings  Ass'n  v.  Nixon-Jones  Printing  Co.  (1887)  25  Mo. 
App.  642. 

i2Lockwood  V.  Mechanics'  Nat.  Bank  (1869)  9  R.  I.  335.  Sixty- 
years'  usage  was  considered  by  Lord  Mansfleld  to  be  sufficient  evidence 
of  a  by-law.  Perkin  v.  Cutlers'  Co.  (1765)  2  Selw.  N.  P.  (13th  Ed.) 
1183.  Four  years'  acquiescence  has  been  held  in  New  York  to  amount 
to  a  ratification.  Kent  v.  Quicksilver  Mining  Co.  (1879)  78  N.  Y.  159, 
184. 

(11) 


§   14  BY-LAWS.  [Ch.  2 

the  corporation  both  by  the  trustees  and  the  stockhold- 
ers for  many  years,  they  would  be  considered  as  regular 
by-laws  of  the  corporation,  though  they  were  adopted  by 
the  stockholders  instead  of  the  directors.^^  And  a  by-law 
of  a  de  facto  corporation  which  had  been  acquiesced  in 
and  acted  upon  for  more  than  eleven  years  by  all  the 
stockholders  and  officers  will  be  presumed  to  have  been 
duly  enacted.^*  The  adoption  by  a  supreme  lodge  of  an 
unauthorized  by-law  enacted  by  a  subordinate  board  of 
control  renders  such  by-law  effective.^ ^  But  where  the 
statute  authorizes  the  adoption  of  by-laws  after  organi- 
zation, by-laws  prepared  and  signed  by  the  stockholders 
before  organization  are  inoperative.^* 

Quorum. 

§  14.  Where  the  directors  are  empowered  to  pass  by- 
laws, such  power  may  be  exercised  by  a  majority  of  the 
directors  at  a  regularly  or  legally  called  meeting  where 
a  quorum  is  present.^  ^  Thus,  where  a  charter  authorizes 
the  president  and  directors  to  adopt  by-laws,  they  may 
be  adopted  at  a  meeting  attended  only  by  the  president 
and  a  quorum  of  the  directories     ^^^  by-laws  adopted 

13  State  V.  Curtis  (1874)  9  Nev.  335;  Hagerman  v.  Ohio  B.  &  S.  Ass'n 
(1874)  25  Ohio  St.  186. 

14  Marsh  v.  Mathias  (1899)  19  Utah,  350,  56  Pac.  1074. 

15  Supreme  Lodge,  K.  of  P.,  v.  Kutscher  (1899)  179  111.  340,  53  n.  e. 
620. 

leVercoutere  v.  Golden  State  Land  Co.  (1897)  116  Cal.  410,  48  Pac. 
375. 

iTLockwood  V.  Mechanics'  Nat.  Bank  (1869)   9  R.  L  335. 

18  Cahill  V.  Kalamazoo  Mut.  Ins.  Co.  (1845)  2  Doug.  (Mich.)  137,  43 
Am.  Dec.  461. 
(12) 


Ch.  2]  FORM  AND  ENACTMENT.  §   16 

at  a  meeting  of  directors,  at  which  only  a  quorum  is  pres- 
ent, are  admissible  in  evidence  under  an  allegation  in  the 
pleadings  that  they  have  been  adopted  by  the  whole  board, 
since  such  by-laws  regularly  passed  by  a  quorum  of  the 
directors  are  the  act  of  the  whole  board.^* 

Persons  present  and  not  voting. 

§  15.  Where  by-laws  are  passed  by  the  corporators  at 
a  general  meeting,  if  those  persons,  having  the  right  and 
opportunity  to  vote,  refuse  to  exercise  such  right,  and  wit- 
ness without  objection  the  passage  of  a  by-law  by  the  usual 
mode  of  voting,  counting,  and  declaring,  the  objection  that 
such  by-law  was  passed  by  an  insufficient  vote,  by  reason 
of  failure  to  count  those  not  voting  as  present,  cannot  be 
raised  by  any  of  those  who  were  present,  since  by  refusing 
to  vote,  and  neglecting  to  make  known  their  objection, 
they  virtually  sanction  the  acts  of  those  who  voted,  and 
thus  waive  all  objection  to  their  validity.^®  It  has  also 
been  held  that  a  member  of  a  mutual  insurance  company 
cannot  question  the  validity  of  by-laws  under  which  he  be- 
came a  member  on  the  ground  that  they  were  not  regular- 
ly adopted.^^ 

Adoption  outside  state — Implied  adoption. 

§  16.     The  adoption  of  a  by-law,  being  in  the  nature  of 

"Cahill  V.  Kalamazoo  Mut.  Ins.  Co.  (1845)  2  Doug.  (Mich.)  137,  43 
Am,  Dec.  461.     See  post,  §  158.  ■" 

20  Richardson  v.  Union  Congregational  Soc.  (1877)  58  N.  H.  188. 

2iPfister  V.  Gerwig  (1890)  122  Ind.  567,  23  N.  B.  1041.  Sse,  also, 
Morrison  T.  Dorsey  (1877)  48  Md.  461. 

(13) 


§   17  BY-LAWS.  [Ch.  3 

a  corporate  act,^^  cannot  be  made  outside  of  the  state  in 
which  the  corporation  is  incorporated.^^  Where  a  cor- 
poration has  formally  adopted  a  written  code  of  by-laws, 
the  existence  of  other  by-laws  will  not  be  implied  from 
its  custom  or  usage.^*  But  evidence  of  a  custom  of  doing 
business  in  an  association  whose  constitution  and  all 
rights  and  duties  under  it  rest  in  agreement,  and  not  upon 
an  act  of  incorporation,  is  admissible  to  show  consent  or 
acquiescence  in  an  actual  modification  of  the  by-laws.^^ 

Amendment. 

§  17.  The  power  to  amend  by-laws  is  as  broad  as  the 
power  to  enact  them.^^  An  amendment  or  alteration  is 
simply  the  enactment  of  a  new  by-law  in  relation  to  the 
same  subject-matter.  When  the  corporation  adopts  the 
by-laws,  they  can  be  amended  only  by  the  corporation 
itself;  when  adopted  by  the  directors,  the  directors  may 
amend  them.^'^     In  the  absence  of  the  usual  provision  for 

22  In  re  Klaus  (1886)  67  Wis.  405. 

23  Mitchell  V.  Vermont  Copper  Mining  Co.  (1876)  40  N.  Y.  Super.  Ct. 
413.  It  may  be  questioned,  however,  whether  this  would  be  true  under 
statutes  which,  like  those  of  Colorado,  allow  the  directors  to  adopt 
by-laws,  and  also  provide  that  directors'  meetings  may  be  held  outside 
the  state.    But  this  point  has  not  been  expressly  decided. 

24  District  Grand  Lodge  v.  Cohn  (1886)  20  111.  App.  344. 

25  Henry  v.  Jackson  (1865)  37  Vt.  431. 

26  Under  the  Illinois  loan  association  act  of  1879,  requiring  a  copy 
of  the  by-laws  to  be  made  part  of  the  certificate  of  organization,  which 
must  be  recorded,  it  was  held  that  a  loan  association  was  without 
power  to  amend  its  by-laws.  Fritze  v.  Equitable  B.  &  L.  Soc.  (l&OO) 
186  111.  183,  57  N.  E.  873. 

27  Heintzelmaa  v.  Druids'  Reli^  Aas'n  (1888)  38  Minn.  138,  36  N. 
(14) 


Ch,  2]  FORM  AND  ENACTMENT.  §   18 

the  amendment  of  the  by-laws  at  some  specified  time  upon 
special  notice,  a  majority  may  amend  at  any  corporate 
meeting.^®  When  the  by-laws  provide  how  they  may  be 
amended,  a  member  is  not  affected  by  a  change  made  in 
any  other  way.^®  Hence,  where  the  by-laws  require  no- 
tice to  members  of  amendments,  a  member  is  not  bound 
by  action  taken  under  an  amendment  of  which  he  is  not 
shown  to  have  had  notice.^" 

Express  repeal. 

§  18.  What  has  been  already  said  in  regard  to  the 
amendment  of  by-laws  is  also  applicable  to  the  subject 
of  their  repeal.     The  power  that  can  adopt  by-laws  may 

W.  100.  In  the  case  of  Stevens  v.  Davison  (1868)  18  Grat.  (Va.)  819, 
it  was  held  that,  where  one  of  the  by-laws  of  the  corporation  provided 
that  certain  contracts  should  not  be  made,  except  the  same  be  ap- 
proved by  a  majority  of  the  stockholders,  and  another  by-law  gave  the 
directors  power  to  alter  or  amend  any  of  the  by-laws,  the  directors 
had  no  authority  to  alter  the  former  by-law,  since  it  was  intended  as 
a  limitation  of  their  power.  The  report  does  not  state  who  passed 
these  by-laws,  but  it  is  difficult  to  reconcile  this  decision  with  the  pre- 
vailing current  of  authority. 

28  Scanlan  v.  Snow  (1894)  2  App.  D.  C.  137. 

29  Mutual  A.  &  I.  Soc.  v.  Monti  (1896)  59  N.  J.  Law,  341,  36  Atl. 
666;  Corley  v.  Travelers'  Protective  Ass'n  (1900)  105  Fed.  854.  But 
see  Fee  v.  National  Masonic  Ace.  Ass'n  (1900)  110  Iowa,  271,  81  N.  W. 
483. 

30  Northwestern  Life  Assur.  Co.  t.  Erlenkoetter  (1900)  90  111.  App. 
99;  Metropolitan  Safety  Fund  Ace.  Ass'n  v.  Windover  (1891)  137  111. 
417,  27  N.  B.  538.  For  a  discussion  of  the  effect  upon  members  of  a  sub- 
sequent alteration  or  amendment  of  the  by-laws,  seo  chapter  5,  §  118  et 
Beq. 

(15) 


§  19  BY-LAWS.  [Ch.  2 

repeal  them.^^  Any  meeting  of  persons  authorized  to  en- 
act by-laws  can  repeal  such  by-laws  by  a  majority  vote, 
and  even  a  by-law  requiring  a  two-thirds  vote  of  the  mem- 
bers present  to  alter  or  amend  the  by-laws  of  a  corpora- 
tion may  itself  be  altered,  amended,  or  repealed  by  a  ma- 
jority vote  of  the  same  power  that  enacted  it.^^ 

Implied  repeal. 

§  19.  In  some  cases  it  has  been  held  that  a  by-law 
formally  adopted  by  the  directors  may  be  repealed  by  a 
course  of  conduct  by  them  inconsistent  with  such  by- 
law.^^  Thus,  in  a  case  where  the  directors  had  power  to 
make  by-laws,  which  were  to  be  entered  in  a  book  and 
signed  by  three  directors,  and  one  of  the  by-laws  so  made 
by  them  prohibited  the  corporation  from  taking  a  trans- 
fer of  shares  of  stock  in  other  companies,  it  was  held  that  a 
resolution  of  the  directors  to  have  certain  shares,  held  by 
the  corporation  as  security,  transferred  to  its  name,  abro- 

•iBank  of  Holly  Springs  v.  Pinson  (1880)  58  Miss.  421;  Rex  v.  Ash- 
well  (1810)  12  East,  22.  There  may  be  possible  exceptions  to  this 
rule  under  the  provisions  of  peculiar  statutes.  Thus,  the  Illinois  stat- 
utes provide  that,  in  case  of  corporations  not  organized  for  pecuniary 
profit,  the  trustees  or  directors  may  make  by-laws,  and  that  the  by- 
laws made  by  them  may  be  modified,  altered,  or  amended  by  the  mem- 
bers at  any  annual  meeting.  Under  this  statute  it  would  seem  that 
a  by-law  passed  by  the  directors,  and  then  amended  by  the  members 
at  the  annual  meeting,  could  not  thereafter  be  repealed  by  the  direct- 
ors, since  that  would,  in  effect,  allow  the  directors  to  override  the 
members  in  regard  to  a  matter  placed  by  the  statute  within  the  mem- 
bers' control.    But  the  point  has  not  yet  been  adjudicated. 

s2  Richardson  v.  Union  Congregational  Soc.  (1877)  58  N.  H.  189. 

83  Bank  of  Holly  Springs  v.  Pinson  (1880)  58  Miss.  421. 
(16) 


Ch.  2]  FORM  AND  ENACTMENT.  §   20 

gated  the  by-law,  although  such  resolution  was  not  signed 
or  entered  as  a  by-law.'*  And  where  a  corporation  whose 
by-laws  declared  that  the  corporation  should  have  a  lien 
on  the  stock  of  its  stockholders  to  secure  any  debts  such 
stockholders  might  owe  the  corporation,  and  directed  that 
the  certificates  of  stock  should  contain  a  notice  of  such 
by-law,  it  was  held  that  the  issuance  of  certificates  of 
stock  which  contained  no  notice  of  the  by-law  constituted 
a  repeal  of  the  by-law.^'*  An  amendment  reducing  the 
number  of  directors  necessary  to  constitute  a  quorum  from 
four  to  three  does  not,  by  implication,  repeal  another 
by-law  which  required  a  vote  of  two-thirds  of  the  directors 
to  suspend  certain  officers.*^  Nor  is  a  by-law  repealed 
by  the  adoption  of  a  new  constitution  making  no  refer- 
ence to  by-laws.*^ 
Waiver — Provision  in  by-law  against  waiver. 

§  20.  Corporations  may  waive  by-laws  enacted  for  their 
own  convenience,  and  not  based  on  any  statutory  or  char- 
ter limitation,^^  even  when  the  by-law  itself  provides 
against  waiver.**    A  waiver  of  a  by-law  is  in  effect  a 

8*  In  re  Asiatic  Ba-^king  Corporation  (1869)  L.  R.  4  Ch.  252. 
85  Bank  of  Holly  Springs  v.  Pinson  (1880)   58  Miss.  438. 
88  Stockton  V.  Harmon  (1893)  32  Fla.  312,  13  So.  833. 

87  Herman  v.  Plummer  (1898)  20  Wash.  363,  55  Pac.  315. 

88  Swedish  Christian  Mission  Soc.  v.  Lawrence  (1900)  79  Minn.  124» 
81  N.  W.  756;  Currier  v.  Continental  Life  Ins.  Co.  (1873)  53  N.  H. 
538;  McKenney  v.  Diamond  State  Loan  Ass'n  (1889)  8  Houst.  (Del.) 
557,  18  AtL  905;  Underhill  v.  Santa  Barbara  Land,  Bldg.  &  Imp.  Co. 
(1892)  93  Cal.  300,  28  Pac  1049;  Wiberg  v.  Minnesota  Scandinavian 
ReUef  Ass'n  (1898)  73  Minn.  297,  76  N.  W.  37. 

89  Supreme  Tent,  K.  of  M.,  v.  Volkert  (1900)  25  Ind.  App.  627,  57  N. 
B.  203. 

(in 

Boisot  By  Laws — 2. 


§  21  BY-LAWS.  [Ch.  2 

repeal  of  such  by-law  in  a  particular  case,  and  it  logi- 
cally follows  that  the  power  to  repeal  includes  the  power 
to  waive.  If  the  directors  have  the  power  to  pass  by- 
laws, they  may  by  their  conduct  waive  such  by-laws. 
Thus,  where  the  directors  of  a  mutual  fire  insurance  com- 
pany issue  a  policy  in  violation  of  the  by-laws,  the  policy 
is  not  therefore  void,  since  the  issuance  of  the  policy  con- 
stitutes a  waiver  of  the  by-laws ;^'^  and  this  is  true,  even 
though  the  policy  contains  an  express  reference  to  the  by- 
laws.*^ In  such  cases  the  insurance  company  cannot  set 
up  as  against  the  policy  the  by-law  which  it  has  waived,^^ 
but  the  members'  rights  are  to  be  measured  by  the  terms  of 
the  policy  itself.** 

Same — By-law  relating  to  transfer  of  stock. 

§  21.  Where  a  by-law  required  the  consent  of  the  di- 
rectors to  a  transfer  of  stock  by  any  stockholder**  who 
was  indebted  to  the  company,  but  in  the  practice  of  the 
company  such  cases  were  never  brought  before  the  board, 
it  was  held  that  a  transfer  by  such  a  stockholder,  made 

40  Union  Mut.  Fire  Ins.  Co.  v.  Keyser  (1855)  32  N.  H.  313,  64  Am. 
Dec.  375;  Campbell  v.  Merchants'  &  Farmers'  Mut.  Fire  Ins.  Co.  (1858) 
37  N.  H.  35,  72  Am.  Dec.  324. 

41  Fitzgerald  v.  Equitable  R.  F.  Life  Ass'n  (1888)  3  N.  Y.  Supp. 
214.  But  see  International  B.  &  L.  Ass'n  v.  Abbott  (1892)  85  Tex.  220, 
20  S.  W.  118. 

42  Susquehanna  Mut  Fire  Ins.  Co.  v.  Elkins  (1889)  124  Pa.  St.  484, 
17  Atl.  24. 

*:i  Davidson  v.  Old  People's  Mut.  Ben.  Soc.   (1888)   39  Minn.  303,  39 
N.  W.  803. 
44  Morrison  v.  Wisconsin  O.  F.  Mut.  Life  Ins.  Co.  (1884)  59  Wis.  162. 

(18) 


Ch.  2]  FORM  AND  ENACTMENT.  .         ^   22 

without  such  consent,  but  in  the  presence  of  the  secre- 
tary, according  to  the  usage  of  the  company,  was  good  as 
against  the  company.'*^  Where  a  by-law  provides  that 
stock  shall  not  be  transferred  until  entered  in  a  certain 
book,  the  corporation,  by  failing  to  keep  such  a  book, 
waives  the  by-law.^"  And  the  refusal  of  a  corporation  to 
enter  a  transfer  of  stock  on  its  books  is  a  waiver  of  a  by- 
law requiring  such  entry  in  order  to  transfer  title.*'' 
Where  by-laws  made  by  the  directors  prescribe  what  notice 
must  be  given  for  meetings  of  the  directors,  a  contract 
entered  into  by  the  directors  in  behalf  of  the  corporation 
with  a  third  person  at  a  meeting  not  so  called  is  not  in- 
valid, since  the  conduct  of  the  directors  in  meeting  with- 
out such  notice,  and  entering  into  a  contract  at  such 
meeting,  constitutes  a  waiver  of  that  by-law  so  far  as  that 
contract  is  concerned.^^ 

Same — Same. 

§  22.     In  a  recent  case  in  Khode  Island,  it  appeared  that 
the  charter  of  a  corporation   provided  that  its  shares 

*8  Chambersburg  Ins.  Co.  v.  Smith  (1849)  11  Pa.  St.  120.  But  in 
some  of  the  English  colonial  courts  it  is  held  that,  as  between  a  cor- 
poration and  its  members,  a  course  of  dealing  at  variance  with  its  by- 
laws, for  whatever  length  of  time  pursued  or  acquiesced  In,  is  of  no 
force  as  a  waiver  of  the  by-laws.  Watson  v.  Bendigo  Permanent  Land 
&  Bldg.  Soc.  (1884)  10  Vict.  Law  R.  26;  Sperry  v.  Dransfleld  (1884) 
2  New  Zealand  (S.  C.)   319. 

46  Chemical  Nat.  Bank  v.  Colwell  (1892)  132  N,  Y,  250,  30  N.  E. 
644;  Isham  v.  Buckingham  (1872)  49  N.  Y.  216,  221. 

47  Robinson  v.  National  Bank  of  New  Berne  (1884)  95  N.  Y.  637. 

48  Samuel  v.  Holladay  (1869)  1  Woolw.  400,  Fed.  Cas.  No.  12,288,  1 
Am,  Corp.  Cas.  139;  Samuels  Y.  Holliday  (1868)  McCahon  (Kan.)  214. 

(19) 


§  22        •  BY-LAWS.  [Ch.  2 

should  be  transferred  in  such  manner  as  should  be  pre- 
scribed by  its  by-laws.  The  by-laws  provided  that  the 
treasurer  should  keep  a  book,  which  was  made  a  part  of 
the  corporate  records,  in  which  the  names  of  all  the  stock- 
holders, and  the  number  of  shares  held  by  each,  should 
be  kept.  The  certificate  of  stock,  prescribed  by  the  by- 
laws, contained  the  provision:  "Transferable  only  in 
person  or  by  attorney  on  the  transfer  books  of  the  corpora- 
tion, and  on  the  surrender  of  this  certificate."  There 
was  no  by-law  prescribing  how  stock  should  be  transferred, 
and  no  transfer  book  was  kept  except  the  certificate  book, 
which  contained  marginal  stubs,  showing  the  new  and 
old  certificate  numbers,  the  names  of  the  persons  from 
whom  and  to  whom  the  stock  was  transferred,  the  date  of 
the  transfer,  and  receipt  for  the  new  certificate,  signed 
by  the  transferee.  To  these  marginal  stubs  the  surren- 
dered certificates  were  attached.  It  was  shown  that  this 
was  the  uniform  system  of  transfer  followed  by  the  com- 
pany, and  the  holder  of  the  new  certificate  was  recog- 
nized by  the  corporation  as  a  stockholder.  The  court 
held  that  by  permitting  transfers,  in  the  manner  stated, 
the  company  waived  the  requirements  of  transfer  "in  per- 
son or  by  attorney,"  and  that  since  the  corporation  was 
competent  to  make  such  waiver,  the  entries  of  the  trans- 
fers on  its  certificate  book  were  sufficient  to  vest  the  legal 
title  to  the  stock  in  the  transferees,  and  bound  the  corpora- 
tion and  its  creditors.*®     And  where  the  owner  of  stock 

«  American  Nat.  Bank  v.  Oriental  Mills  (1891)  17  R.  I.  551,  23  Atl. 
795.  See,  also.  Chemical  Nat.  Bank  v.  Colwell  (1892)  132  N.  Y.  250, 
(20) 


Ch.  2]  FORM  AND  ENACTMENT.  §  23 

has  assigned  and  transferred  his  certificate,  and  the  cor- 
poration, without  valid  reajaon,  refuses  to  malvc  the  trans- 
fer, this  amounts  to  a  waiver  of  the  requirements  as  to 
transfer.^**  Of  course  the  by-law  of  an  insurance  associa- 
tion requiring  the  surrender  of  the  old  certificate  when  a 
member  changes  his  beneficiary  may  be  waived  where  the 
original  certificate  is  lost  or  destroyed.*^^ 

Same — By-law  relating  to  term  of  officers. 

§  23.  It  has  been  held  in  New  York  that  where  a  cor- 
poration whose  by-laws  provided  that  its  officers  and 
clerks  should  hold  office  during  the  pleasure  of  the  board 
of  directors  entered  into  a  contract  engaging  a  clerk  for 
the  term  of  one  year,  and  then  discharged  him  without 
cause  before  the  year  expired,  the  clerk  had  a  right  of 
action  against  the  corporation  for  his  salary  for  the  unex- 
pired term,  since  the  action  of  the  board  in  employing 
him  for  a  specified  term  constituted  a  waiver  of  the  by- 
law.*^^  But  in  a  case  in  Louisiana,  where  the  facts  were 
very  similar,  except  that  the  person  employed  was  an  offi- 
cer of  the  corporation  instead  of  a  clerk,  it  was  held  that 
he  had  no  right  of  action,  since  he  was  presumed  to  know 
the  by-laws,  and  to  be  bound  by  them.'^*  And  a  similar 
decision  has  been  rendered  in  North  Carolina.^* 

30  N.  E.  644;  Isham  v.  Buckingham  (1872)  49  N.  Y.  216,  222;  Stewart 
V.  Walla  Walla  P.  &  P.  Co.  (1889)  1  Wash.  St.  521,  20  Pac.  605;  Rich- 
mondville  Mfg.  Co.  v.  Prall  (1833)  9  Conn.  487. 

60  Robinson  v.  National  Bank  of  New  Berne  (1884)  95  N.  Y.  637. 

BiDelaney  v.  Delaney  (1898)  175  111.  187,  51  N.  E.  961. 

»2Martino  v.  Commerce  Fire  Ins.  Co.  (1881)  47  N.  Y.  Snper.  CL 
520.    See  lioyer  y.  East  Shore  Terminal  Co.   (1894)   41  S.  a  300,  19 

(21) 


§  25  BY-LAWS.  j;Ch.  2 

Same — ^By-law  relating  to  powers  of  corporation. 

§  24.  It  has  been  held  that  a  resolution  of  the  directors 
of  a  corporation,  ordering  certain  stock  held  by  the  cor- 
poration as  security  for  a  loan  to  be  transferred  to  the 
corporation,  was  a  waiver  of  a  by-law  which  forbade  the 
corporation  to  acquire  shares  in  other  companies,^^  and 
that  the  issuance  of  stock  certificates  containing  no  refer- 
ence to  the  by-laws  was  a  waiver  of  a  by-law  which  pro- 
vided that  debts  due  from  the  stockholders  to  the  corpora- 
tion should  be  a  lien  on  their  stock,  and  that  the  certifi- 
cates of  stock  should  contain  notice  of  such  by-law.''® 
Recognizing  as  a  member  of  a  corporation  a  person  who 
has  inadvertently  failed  to  sign  the  constitution,  as  re- 
quired by  a  by-law,  is  a  waiver  of  such  by-law.'^'' 

Same — By-law  relating  to  admission  of  member. 

§  25.  By  admitting  a  member  who  is  eligible  under 
the  charter,  but  not  under  the  by-laws,  the  latter  are 

S.  E.  651,  25  L.  R.  A.  48;  Trawick  v.  Peoria  &  Ft.  C.  St.  Ry.  Co.  (1896) 
68  111.  App.  156.  But  a  contract  engaging  an  employe  for  life  is  not 
justified  by  a  by-law  authorizing  the  president  and  actuary  "to  appoint, 
remove,  and  fix  the  compensation  of  each  and  every  person,  except 
agents,  employed  by  the  company."  Carney  v.  New  York  Life  Ins. 
Co.  (1900)  162  N.  Y.  453,  57  N.  E.  78,  49  L.  R.  A.  471,  20  Nat.  Corp. 
Rep.  822,  affirming  (1897)  45  N.  Y.  Supp.  1103,  19  App.  Div.  160. 

68  Hunter  v.  Sun  Mut.  Ins.  Co.  (1874)  26  La.  Ann.  13. 

84  Ellis  v.  North  Carolina  Inst,  for  Deaf  &  Dumb  &  Blind  (1873) 
68  N.  C.  423,  5  Am.  Corp.  Cas.  591. 

65  In  re  Asiatic 'Banking  Corporation  (1869)  L.  R.  4  Ch.  252. 

68  Bank  of  Holly  Springs  v.  Pinson   (1880)   58  Miss.  438. 

B7  State  V.  Sibley   (1879)   25  Minn.  387. 

(22) 


Ch.  2]  FORM  AND  ENACTMENT.  §  25 

waived.'*  An  insurance  association  may  waive  a  by-law 
requiring  a  medical  examination  of  the  applicants.^^  The 
general  manager  of  a  society  may  waive  compliance  with 
the  by-laws  on  the  part  of  members  f^  but  it  has  been  held 
that  an  officer  has  no  authority  to  waive  any  by-law  relat- 
ing to  the  substance  of  the  contract  between  the  member 
and  the  association,®^  Of  course  a  member  may  waive 
compliance  with  by-laws  enacted  for  his  benefit.®^  The 
fact  that  oral  contracts  of  insurance  are  forbidden  by  the 
by-laws  does  not  render  a  settlement  under  such  a  con- 
tract ultra  vires,  since  the  provision  may  be  waived.^^  So, 
also,  by-laws  of  a  mutual  benefit  society  requiring  any 
alteration  of  the  contract  of  membership  to  be  in  writing, 
and  signed  by  the  treasurer,  and  requiring  both  the  mem- 
ber insured  and  the  beneficiary  to  sign  the  form  of  as- 
signment, may  be  waived.®^  But  where  the  by-laws  pro- 
vide that  all  notes  of  the  company  shall  be  signed  by  the 
president  and  indorsed  by  the  secretary,  the  fact  that  the 
secretary  has  previously  indorsed  two  notes  without  the 

68Wiberg  v.  Minnesota  Scandinavian  Relief  Ass'n   (1898)   73  Minn. 
297,  76  N.  W.  37. 

88  Watts  V.  Equitable  Mut.  Life  Ass'n  (Iowa,  1900)  82  N.  W.  441. 

60  Burlington  Voluntary  R.  D.  v.  White  (1894)  41  Neb.  547,  59  N.  W. 
747. 

ei  Harvey  v.  Grand  Lodge,  A.  O.  U.  W.  (1892)  50  Mo.  App.  472. 

82  State  V.  Cincinnati  C.  of  C.  &  M,  Exchange   (1897)   4  Ohio  N.  P. 
244;  Miller  v.  United  States  Grand  Lodge  (1897)  72  Mo.  App,  499. 

«3Stoehlke  v.  Hahn    (1895)    158  111.  79,  42  N.  E.  150, 

«*  Anthony  v.  Maasachuseftts  Ben.  Ass'n  (1893)  158  Mass,  322.  33  N. 
E.577. 

(23) 


§  26  BY-LAWS.  [Ch.    2 

president's  signature  is  not  sufficient  to  show  a  waiver  of 
the  by-law.®** 

Waiver  by  insurance  companies — By-law  as  to  proof  of  insurance 
loss. 

§  26.  Most  of  the  decisions  relating  to  waiver  arise  in 
litigation  over  insurance  policies.  Thus  it  has  been  held 
that  where  a  by-law  of  a  mutual  benefit  association  pro- 
vided that,  upon  receipt  of  notice  of  the  death  of  a  mem- 
ber, the  secretary  should  immediately  forward  to  the  mem- 
ber's representatives  the  proper  blanks  for  proof  of  death, 
with  full  instructions  how  to  make  such  proof,  the  fail- 
ure of  the  association  to  send  such  blanks  and  instructions, 
when  requested  so  to  do,  constituted  a  waiver  of  the  re- 
quirement of  proof  of  death,®*  even  though  it  was  claimed 
that  the  deceased  had  forfeited  his  rights,  and  his  certifi- 
cate had  been  canceled.®^  And  a  by-law  providing  for  sub- 
mission of  claims  to  a  subordinate  lodge,  and  for  an  appeal 
to  a  superior  lodge,  is  waived  if  the  subordinate  lodge 
defer  action  until  it  is  too  late  to  take  an  appeal  within 
the  time  allowed  by  the  by-law.®*  A  forfeiture  of  an  in- 
surance policy  for  violation  of  a  by-law  is  waived  by  de- 

•6  Davis  V.  Rockingliam  Inv.  Co.  (1892)  89  Va.  290,  15  S.  E.  547. 

«« Covenant  Mut  Ben.  Ass'n  v.  Spies  (1885)  114  111.  463,  2  N.  B. 
482;  Order  of  Chosen  Friends  v.  Austerlitz  (1897)  75  111.  App.  74. 

«7  Covenant  Mut.  Ben.  Ass'n  v.  Spies  (1885)  114  111.  463,  2  N.  B. 
482;  Payn  v.  Rochester  M.  R.  Soc.  (1885)  17  Abb.  New  Cas.  (N.  Y.) 
53;  Daniher  v.  Grand  Lodge,  A.  O.  U.  W.  (1894)  10  Utah,  110,  37  Pac. 
245. 

«8  Brotherhood  of  Railroad  Trainmen  v.  Newton  (1898)  79  111.  App. 
500. 

(24) 


Ch.  2]  FORM  AND  ENACTMENT.  §  28 

manding  proofs  of  loss  without  objecting  on  account  of 
such  violation.** 

Same — Same. 

§  27.  The  failure  to  insert  in  the  proofs  of  loss  certain 
details  required  by  the  by-laws  is  waived  by  receiving  the 
proofs  without  objection  on  account  of  the  absence  of 
such  details;'^®  and  the  requirement  of  the  by-laws  that 
formal  proof  of  loss  shall  be  given  is  waived  by  the  com- 
pany when  its  officers  examine  the  premises  for  them- 
selves, and  inform  the  insured  that  no  further  proof  of 
loss  is  necessary.^^  Insuring  in  one  class  of  risks  prop- 
erty which,  according  to  the  by-laws,  is  properly  insura- 
ble only  in  another  class,  constitutes  a  waiver  of  the 
by-law.''^^  But  a  by-law  requiring  the  insured,  before  the 
delivery  of  any  policy,  to  pay  such  premium,  and  give 
such  deposit  note  as  the  president  and  directors  shall 
determine,  is  not  waived  by  the  fact  that,  after  the  time 
for  paying  the  premium  had  elapsed,  the  president  and 
secretary  requested  the  insured  to  pay  the  premium,  with- 
out suggesting  that  the  policy  had  become  forfeited.^* 

Same — ^By-law  as  to  designation  of  beneficiary. 

§  28.     The  requirement  in  the  by-laws  of  a  mutual  bene- 

esjerdee  v.  Cottage  Grove  Fire  Ins.  Co.   (1890)   75  Wis.  353,  44  N. 
W.  636. 

70  Underbill  v,  Agawam  Mut.  Fire  Ins.  Co.   (1850)   6  Cush.   (Mass.) 
440. 

71  Priest  V.  Citizens'  Mut.  Fire  Ins.  Co.   (1862)  3  Allen  (Mass.)  602. 

72  Union  Mut.  Fire  Ins.  Co.  v.  Keyser  (1855)  32  N.  H.  313,  64  Am. 
Dec.  375. 

78  Brewer  v.  Chelsea  Mut.  Fire  Ins.  Co.  (1859)  14  Gray  (Mass.)  203. 

(25) 


§  28  BY-LAWS.  [Ch.  2 

fit  association  that  beneficiaries  must  be  desif^iated  in 
writing  is  waived  by  the  acceptance  and  notation  of  an 
oral  designation  with  the  statement  that  the  member  need 
do  nothing  more/^  A  life  insurance  company  whose  poli- 
cy ran  to  the  "son-in-law  of  the  assured,  or  said  bene- 
ficiary's heirs  or  assigns,"  and  which  consented  to  an  as- 
signment thereunder,  is  estopped  from  claiming  that  its 
policy  is  void  under  a  by-law  providing  that  the  benefi- 
ciary must  be  a  husband,  wife,  family,  heirs,  legal  as- 
signee, or  creditor  of  the  assuredJ"^  Before  the  death  of  a 
member,  the  association  for  whose  benefit  alone  the  rules 
governing  changes  of  beneficiaries  are  made  may  waive 
compliance  therewith,  and  thus  validate  attempts  to 
change  beneficiaries  which  would  be  ineffectual  under  the 
rulesJ^  But  after  the  policy  holder's  death,  the  associa- 
tion cannot  waive  the  requirements  of  the  by-laws  as  to  the 
mode  of  changing  the  beneficiaryj'^  Where  rights  have 
attached  under  the  rules  by  the  death  of  the  insured,  an 
action  by  which  the  society  interpleads  rival  claimants  to 
the  fund  does  not  constitute  a  waiver  upon  its  part  of  the 
rulesJ®  And  the  fact  that  a  benefit  society,  in  ignorance 
of  the  true  age  of  the  deceased,  attended  his  funeral  in  uni- 
form, does  not  waive  a  defense  based  upon  his  misrepre- 

74  Hanson  v.  Minnesota  Scandinavian  Relief  Ass'n   (1894)   59  Minn. 
123,  60  N.  W.  1091. 

75  Smith  V.  People's  Mut.  Ben.  Soc.  (1892)  19  N.  Y.  Supp.  432. 

76  Grand  Lodge,  A,  O.  U.  W.,  v.  Reneau  (1898)  75  Mo.  App.  402. 

77  McLaughlin  v.  McLaughlin  (1894)  104  Cal.  171,  37  Pac.  865. 

'8  Smith  V.  Harman  (1899)  28  Misc.  Rep.  681,  69  N.  Y.  Supp.  1044. 
(26) 


Ch.  2]  FORM  AND  ENACTMENT.  §  29 

sentation  as  to  ageJ*  Where  the  beneficiary  was  ignorant 
of  a  by-law  requiring  suit  on  a  policy  to  be  brought  within 
thirty  days  after  the  refusal  of  the  company  to  pay  a 
claim,  and  the  officer  refused  a  request  for  a  copy  of  the  by- 
laws, stating  in  reply  to  an  inquiry  as  to  the  time  in  which 
suit  might  be  brought,  "three  months"  (the  maximum  lim- 
it in  any  case),  the  thirty  days'  limitation  was  waived.^^ 
Same — By-law  as  to  payment  of  assessments. 

§  29.  A  by-law  requiring  payment  of  assessments  with- 
in sixty  days  after  notice  is  waived  by  accepting  payment 
after  the  expiration  of  that  period,  and  giving  notice  of 
further  assessments.^^  And  where  a  subordinate  court  of 
a  benefit  association  was  authorized  by  the  by-laws  to  ex- 
tend the  time  within  which  a  member  might  pay  an  assess- 
ment, and  did  so,  such  an  extension  amounted  to  a  waiver 
of  the  right  to  forfeit  the  member's  certificate  for  nonpay- 
ment.®^ The  provisions  of  the  by-laws  of  a  fraternal  so- 
ciety depriving  a  member  in  arrears  from  participation  in 
sick  benefits  is  waived  by  the  acceptance  of  a  donation  of 
the  delinquent  dues  by  other  members  of  the  society.*-'^ 
Where  an  assessment  was  paid  in  accordance  with  a  cer- 

79  Marcoux  v.  Society  of  Beneficence  St.  J.  B.  (1898)  91  Me.  250,  39 
Atl.  1027. 

80  Metropolitan  Ace.  Ass'n  v.  Froiland  (1896)  161  111.  30,  43  N.  E. 
766. 

81  Moore  v.  Order  of  Railway  Conductors  (1894)  90  Iowa,  721,  57  N. 
W.  623.  And  see  Metropolitan  Safety  Fund  Ace.  Ass'n  v.  Windover 
(1891)  137  111.  417,  27  N.  E.  538. 

82  Flicek  V.  High  Court,  C.  O.  of  F.  (1900)  90  111.  App.  344. 
MBartling  v.  Edwards  (1899)  84  111.  App.  471. 

(27) 


§  29  BY-LAWS.  [Ch.  2 

tain  method,  sanctioned  by  the  lodge,  but  different  from 
that  prescribed  by  the  by-laws,  the  association  is  estopped 
from  declaring  a  forfeiture.^*  Hence,  where  the  by-laws 
of  a  fraternal  order  provided  that  certificates  should  be 
void  unless  dues  were  promptly  paid,  but  it  was  the  cus- 
tom to  permit  members  to  pay  dues  when  it  suited  their 
ability  or  convenience,  and  a  policy  was  uncancelled  at 
the  death  of  the  insured,  and  thereafter,  with  knowledge 
of  the  facts,  the  officers  of  the  local  lodge,  charged  with 
the  duty  of  collecting  and  transmitting  assessments  to 
the  parent  lodge,  demanded  and  received  the  overdue  as- 
sessments, the  parent  association  was  held  to  be  estopped 
from  claiming  a  forfeiture  because  the  assessments  were 
not  paid  when  due.**  But  a  by-law  declaring  that,  if  a 
member  is  in  arrears  when  taken  sick,  he  shall  not  be  en- 
titled, by  paying  such  arrears,  to  benefits  during  his  ill- 
ness, is  not  waived  by  the  acceptance  of  such  arrears.*" 
And  where  the  by-laws  provide  for  forfeiture,  without  no- 
tice, for  delinquency,  receipt  of  the  payments  in  default, 
on  condition  that  the  money  is  held  subject  to  the  mem- 
ber's reinstatement,  and  the  subsequent  return  of  the 
money  to  the  member  upon  his  failure  to  furnish  a  health 
certificate,  do  not  constitute  a  waiver.*"^  Where  an  asso- 
ciation disregards  its  rules  as  to  payment  of  dues,  and  fails 
to  forfeit  the  membership  for  nonpayment  thereof,  and 

84  National  Gross  Logedes,  TJ.  O.  T.,  t.  Jung  (1896)  65  111.  App.  313. 

85  Supreme  Tribe  of  Ben  Hur  t.  Hall  (1900)  24  Ind.  App.  316,  56  N. 
B. 780. 

88Nagel  V.  Glasburger  (1890)  10  N.  Y.  Supp.  503. 
sTBowUn  ▼.  Sovereign  Camp  of  W.  W.  (Minn.;  1901)  85  N.  W.  160. 
(28) 


Ch.  2]  FORM  AND  ENACTMENT.  §  29 

afterwards  accepts  the  dues,  it  cannot  set  up  the  rules 
against  the  member's  recovery.^^  Where  the  by-laws  of 
an  unincorporated  association  proTide  that,  if  the  dues 
of  its  members  should  fall  below  a  cei*tain  sum  for  three 
successive  months,  it  should  be  disbanded,  that  contin- 
gency does  not  ipso  facto  terminate  the  association,  since 
such  a  by-law  may  be  waived.®' 

«8Piquenord  v.  Libby  (1879)  7  Mo.  App.  564;  Daniher  v.  Grand 
Lodge,  A.  O.  U.  W.  (1894)  10  Utah,  110,  37  Pac.  245;  Independent  Or- 
der of  Foresters  v.  Haggerty  (1899)  86  111.  App.  31;  Lime  City  B.  &  L. 
Ass'n  V.  Black  (1893)  136  Ind.  544,  35  N.  E.  829. 

soAtnip  V.  Tennessee  Mfg.  Co.  (Tenn.;  1898)  52  S.  W.  1093.  For  a 
discussion  of  the  effect  of  repeal  of  by-laws,  see  chapter  5. 

(29) 


CHAPTER   m. 
SUBJECT-MATTER  OF  BY-LAWS. 

General  Principles. 

I  30.  General  requisites — Conformity  to  law. 

31.  Same — Conformity  to  charter. 

32.  Same — Reasonableness. 

33.  Same — ^Appropriateness. 

34.  Conformity  to  law. 

35.  Same — Violation  of  statute. 

.36.  Same — Modification  of  common-law  rlgbts. 

37.  Same — Extension  of  statutory  rights. 

38.  Conformity  to  charter. 

39.  Same. 

40.  Reasonableness. 

41.  Same. 

42.  Same — Illustrations  of  reasonable  by-laws. 

43.  Same — Illustrations  of  unreasonable  by-laws. 

44.  Appropriateness. 

45.  Same — Illustrations. 

Regulation  of  Pabticulab  Subjects. 

§  46.  Duties  of  officers. 

47.  Same. 

48.  Same. 

49.  Meetings  and  elections. 

50.  Same — Notice. 

51.  Same — Unauthorized  meetings. 

52.  Same — Votes  and  proxies. 

53.  Same — Quorum. 

54.  Assessments  and  dues. 


(30) 


<3h.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  30 

55.  Same — Reasonableness. 

56.  Transfer  of  stock. 

57.  Same — Irregular  transfers. 

58.  Same — Same. 

59.  Same — Restriction  of  transfer. 

60.  Same — Regulating  manner  of  transfer. 

61.  Creation  of  lien  on  stock. 

62.  Same — Operation  of  by-law. 

63.  Same — Scope  of  lien. 

64.  Same — Validity  of  by-law. 

65.  Same — Banking  corporations. 

66.  Retiring  or  forfeiting  stock. 

67.  Issuing  preferred  stock. 

68.  Affecting  rights  of  members. 

69.  Same — Suspension  of  members. 

70.  Same — Limiting  right  to  benefit,  and  restricting  suits. 

71.  Same — Expulsion  of  subordinate  lodge. 

72.  Private  affairs  of  members. 

73.  Same — Individual  trade  by  members. 

74.  Same — Honesty  in  individual  dealings. 

75.  Same — Requirement  of  arbitration  between  members. 

76.  Restraint  of  trade. 

77.  Same. 

78.  Same — Competition  between  exchange  and  its  members. 

79.  Penalties. 

80.  Same — ^Reasonableness. 

81.  Same — Building  and  loan  societies. 

82.  Same — Same. 

83.  Same — Collection  of  fines. 

84.  Same — Expulsion. 

85.  Same — Same. 

86.  Same — For  nonpayment  of  dues. 

GENEBAL   PEINCIPLE3. 

"General  requisites — Confonnity  to  law. 

§  30.    In  determining  the  validity  of  by-laws,  consider- 

(31) 


§  33  BY-LAWS.  [Ch.  3 

ed  in  regard  to  their  subject-matter,  there  are  a  few  gen- 
eral principles  that  must  be  always  kept  in  view. 

The  first  is  that  a  by-law  must  not  be  contrary  to  the 
law  of  the  land;  and  by  the  law  of  the  land  is  meant  not 
only  the  statutory  or  written  law,  but  also  the  constitu- 
tion of  the  state  and  the  principles  and  policy  of  the  un- 
written common  law.  Thus,  a  by-law  which  contravenes 
the  policy  of  the  law^  by  imposing  an  undue  restraint  upon 
trade  is  clearly  as  illegal  and  null  as  if  its  adoption  had 
been  expressly  forbidden  by  statute. 

Same— Conformity  to  charter, 

§  31.  The  second  principle  is  that  by-laws  must  not 
conflict  with  the  provisions  of  the  charter  or  articles  of 
association  of  the  corporation.  By-laws  are  intended  to 
supplement  the  charter,  and  to  provide  for  matters  which 
the  charter  leaves  indefinite.  If  they  go  beyond  this,  and 
attempt  to  change  any  provision,  directly  or  indirectly 
contained  in  the  charter,  they  are  ultra  vires  and  void. 

Same — Reasonablenes&. 

§  32.  The  third  principle  is  that  by-laws  must  be  rea- 
sonable. By  this  is  not  meant  that  they  must  be  agreeable 
to  every  one,  but  simply  that  there  must  be  nothing  in 
their  provisions  contrary  to  judicial  reason. 

Same — Appropriateness. 

§  33.  The  fourth  principle  is  that  the  subject-matter 
of  by-laws  must  be  germane  to  the  objects  for  which  the 

(32) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  34  § 

corporation  is  formed.     These  four  principles  will  now  be 
considered  in  detail. 

Conformity  to  law. 

§  34.  By-laws  must  not  be  contrary  to  law.*  They 
must  conform  not  only  to  the  constitution  and  laws  of  the 
state  under  which  the  corporation  is  organized,  but  also 
to  the  constitution  and  laws  of  the  United  States,  so  far 
as  the  same  are  applicable.^  Thus,  ex  post  facto  by-laws 
are  void  as  contrary  to  the  constitution.^  A  by-law  which 
operates  to  create  usurious  loans  from  the  association  to 
its  members  is  void;^  and  a  provision  in  the  charter  of  a 
bank  corporation  authorizing  the  directors  to  make  by- 

1  Cunningham  v.  Alabama  Life  Ins.  &  T.  Co.  (1843)  4  Ala.  654;  Kent 
V.  Quicksilver  Mining  Co.  (1879)  78  N.  Y.  182;  American  Legion  of 
Honor  v.  Perry  (1886)  140  Mass.  592;  Butchers'  Ben.  Ass'n  (1860) 
35  Pa.  St.  151;  Pulford  v.  Fire  Department  (1875)  31  Mich.  466;  Peo- 
ple V.  Throop  (1834)  11  Wend.  (N.  Y.)  186;  Gordon  v.  Muchler  (1882) 
34  La.  Ann.  606;  King  v.  International  B.  L.  &  I.  Union  (1897)  170 
111.  135,  48  N.  E.  677;  Trowbridge  v.  Hamilton  (1898)  18  Wash.  686,  52 
Pac.  328;  Krecker  v.  Shirey  (1894)  163  Pa.  St.  534,  30  Atl.  440;  Nevesley 
V.  Webster  (1755)  1  Ld.  Keny.  243;  In  re  Lurman  (1895)  90  Hun  (N. 
Y.)  303,  35  N.  Y.  Supp.  956;  State  v.  Bank  of  Louisiana  (1827)  5  Mart, 
(N.  S.;  La.)   327,  344. 

2  Butchers'  Ben.  Ass'n  (1860)  35  Pa.  St.  151;  Cunningham  v.  Ala- 
bama Life  Ins.  &  T.  Co.  (1843)  4  Ala.  654. 

8  Pulford  V.  Fire  Department  (1875)  31  Mich.  465. 
4  Martin  v.  Nashville  Bldg.  Ass'n  (1865)  2  Coldw.  (Tenn.)  418;  Her- 
bert V.  Kenton  Bldg.  &  Sav.  Ass'n  (1875)  74  Ky.  296.  See  Building  & 
Loan  Ass'n  v.  Dorsey  (1881)  15  S,  C.  462.  But  a  member  of  a  building 
and  loan  association  who  has  paid  usurious  interest  on  money  bor- 
rowed therefrom  may  not  recover  it,  being  in  pari  delicto.  Latham  v. 
Washington  B.  &  L.  Ass'n  (1877)  77  N.  C.  145. 

(33) 
Boisot  By  Laws — 3. 


§  35  BY-LAWS.  [Ch.  3 

laws  concerning  the  time,  manner,  and  terms  upon  which 
discounts  and  deposits  shall  be  made  does  not  justify  a 
by-law  providing  for  loans  by  the  bank  at  usurious  inter- 
est.^ It  has  been  held  in  England  that  a  by-law  made  by 
a  church  society  providing  that  repairs  to  the  parish 
church  shall  be  made  partly  by  one  person  and  partly  by 
another  is  void  as  being  in  contravention  of  the  provision 
of  the  common  law  which  imposes  upon  the  church  war- 
dens the  duty  of  keeping  the  church  in  repair.* 

Same — ^Violation  of  statute. 

§  35.  Where  the  act  under  which  a  benefit  association 
is  incorporated  provides  that  a  member  may  designate  by 
will  a  beneficiary  having  no  insurable  interest  in  his  life, 
a  by-law  prohibiting  a  member  from  doing  so  is  invalid.'' 
And  where  the  constitution  of  the  stat€  provides  that,  in 
elections  of  directors,  every  stockholder  shall  have  the 
right  to  vote  for  his  stock,  and  that  directors  shall  not  be 
elected  in  any  other  way,  a  by-law  of  a  railroad  corpora- 
tion allowing  bondholders  to  vote  for  directors  is  void.* 
It  has  been  held  that,  under  the  Illinois  statutes,  a  build- 
ing and  loan  association  has  no  power  to  issue  shares  ma- 
turing at  any  fixed  period.*     A  by-law  asserting  that  stock- 

6  Seneca  County  Bank  v.  Lamb  (1858)  26  Barb.  (N.  Y.)  596. 
6  Gosling  V.  Veley  (1850)  12  Q.  B.  347. 
T  Nelson  v.  Gibson  (1901)  92  111.  App.  595. 

•  Dnrkee  v.  People  (18S5)   155  111.  354,  40  N.  E.  626. 

•  Wierman  t.  International  B.  L.  &  I.  Union  (1896)  67  IH.  App,  550; 
International  B.  L.  &  I.  Union  v.  King  (1897)  6S  111.  App.  640;  Sulli- 
van V.  Spaniel  (1898)  78  111.  App.  125. 

(34) 


(Jll.    3]  SUBJECT-MATTER  OP  BY-LAWS.  §   35 

holders  are  not  to  be  held  to  their  constitutional  liability 
is  void.^^     Where  the  statute  provides  that  loans  shall  be 
made  to  the  highest  bidder,  a  by-law  providing  for  a  mini- 
mum premium  is  invalid  as  creating  usury  ;^^  but  in  the 
absence  of  a  statute  requiring  competitive  bidding  for 
loans,  such  a  by-law  is  valid.^^     Benefit  associations  can- 
not limit  by  by-laws  the  beneficiaries  prescribed  by  stat- 
ute.^ ^     Hence,  where  the  statute  provides  that  a  member 
may  bequeath  his  mortuary  benefits,  a  by-law  providing 
that,  in  case  a  member  dies  leaving  no  widow,  children, 
or  parents,  the  endowment  shall  go  to  the  reserve  fund  of 
the  society,  is  invalid.^*     Similarly,  where  the  statute  pro- 
vides that  such  benefits  may  be  payable  to  an  affianced 
husband  or  wife,  a  by-law  providing  that  they  shall  be 
payable  only  to  kinsmen,  and  those  dependent  on  the  de- 
ceased is  void.^^     The  fact  that  some  of  the  by-laws  of  a 
building  association  purport  to  authorize  it  to  engage  in 
transactions  outside  the  scope  of  its  legitimate  business 
does  not  destroy  the  character  of  the  association,  where 
it  does  not  appear  that  there  has  been  any  attempt  to 

10  Wells  V.  Black  (1897)  117  Cal.  157,  48  Pac.  1090. 

iilowa  S.  &  L.  Ass'n  v.  Heidt  (1899)  107  Iowa,  297,  77  N.  W.  1050. 
But  see  Orangeville  Mut.  S.  F.  &  L.  Ass'n  v.  Young  (1880)  9  Wkly. 
Notes  Cas.  (Pa.)  251. 

12  Zenith  B.  &  L.  Ass'n  v.  Heimbach  (1899)  77  Minn.  97,  79  N.  W. 
609. 

"Wallace  v.  Madden  (1897)  168  111.  356,  48  N.  E.  181. 

14  Wolf  V.  District  Grand  Lodge  No.  6  (1894)  102  Mich.  23,  60  N. 
W.  445. 

"Wallace  v.  Madden   (1897)   168  HI.  356,  48  N,  E.  181. 

(35) 


§  36  BY-LAWS.  [Ch.  3 

operate  under  such  by-laws.^  ^  Where  the  constitution 
secures  the  right  to  inspect  the  company's  books,  a  by-law 
providing  that  no  stockholder  shall  have  the  right  to  in- 
spect the  books  of  the  company  without  special  authority 
from  the  board  of  directors  is  void.^*^ 

Under  a  statute  providing  that  shares  of  stock  shall  be 
subject  to  a  lien  for  unpaid  installments  to  be  enforced  in 
a  manner  prescribed  by  the  by-laws,  a  by-law  providing 
for  the  forfeiture  without  sale  of  the  shares  is  void,  since 
a  lien  can  only  be  enforced  by  sale.^^  It  seems  that  a  cor- 
poration which  has  passed  an  illegal  by-law  may  be  ousted 
from  the  exercise  of  the  powers  conferred  by  such  by-law 
by  information  brought  by  the  attorney  general  on  the  re- 
lation of  one  of  the  members  of  the  corporation.^® 

Same — Modification  of  common-law  rights. 

§  36.  It  is  not  true,  however,  that  a  by-law  can  never 
create  rights  or  liabilities  unknown  to  the  common  law, 
.  since,  if  this  were  the  case,  no  valid  by-laws  could  be 
created  except  such  as  announced  the  doctrines  of  the  com- 
mon law,  and  these  by-laws  would  be,  of  course,  unneces- 
sary, as  the  law  would  be  in  force  without  them.^"  Thus 
it  was  said  by  Lord  Chief  Justice  Campbell  that  "a  by- 

16  Smith  V.  Southern  B.  &  L.  Ass'n  (1900)  111  Ga.  811,  35  S.  E.  707. 

17  State  V.  Citizens'  Bank  of  Jennings   (1899)    51  La.  Ann.   426,  25 
So.  318. 

18  Mueller  v.  Madison  B.  &  L.  Ass'n  (1898)  11  S.  D.  43,  75  N.  W.  277. 

19  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc,  No.  1  (1879) 
41  Mich.  67.  1  N.  W.  931. 

20  State  V.  Tudor  (1812)  5  Day  (Conn.)  333. 
(36) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  37 

law  cannot  be  said  to  be  inconsistent  with  the  laws  of  this 
kingdom  merely  because  it  forbids  the  doing  of  something 
which  might  lawfully  have  been  done  before,  or  requires 
something  to  be  done  which  there  was  no  previous  obliga- 
tion to  do;  otherwise  a  nominal  power  of  making  by-laws 
would  be  utterly  nugatory."^^  In  other  words,  a  by-law, 
like  a  contract,  may  create  new  rights  and  liabilities  in  ad- 
dition to  those  created  by  law,  but  it  cannot  do  away  with 
or  abrogate  any  right  or  obligation  which  the  law  has 
created.  Thus,  a  by-law  of  a  board  of  trade  which  pro- 
vides that,  on  sales  of  grain  in  bulk  on  elevator  receipts, 
the  buyer  shall  pay  the  first  ten  days'  storage,  unless  other- 
wise specified  at  the  time  of  sale,  is  valid,  although  at 
common  law  the  buyer  would  not  be  responsible,  in  the  ab- 
sence of  any  express  promise  to  pay  for  storage  charges 
that  accrued  before  the  sale.^^ 

Same — Extension  of  statutory  rights. 

§  37.  In  a  case  recently  decided  by  a  United  States  cir- 
cuit court  it  appears  that  the  company  whose  by-law  was 
under  consideration  was  incorporated  in  England  for  the 
purpose  of  operating  mines  in  the  United  States.  Its 
principal  office  was  in  London,  but  all  its  property  except 
the  furnishings  of  its  London  office  was  in  the  United 
States,  and  four-fifths  of  its  capital  stock  was  owned  by 
Americans.  A  by-law  of  the  company  authorized  a  trans- 
fer of  its  property  and  business  or  a  reorganization  of  the 

«iReg.  V.  Edmonds  (1855)  3  C  L.  902,  24  Law  J.  M.  Cas.  124. 
22  Goddard  r.  Mercbaats'  Exchange  (1880)  9  Mo.  App.  290,  (1883)  78 
Mo.  609. 

(37) 


§  33  BY-LAWS.  [Ch.  3 

company  at  a  meeting  of  which  at  least  one  month's  notice 
should  be  given  to  the  stockholders.  The  English  statutes 
allowed  a  reorganization  of  such  a  corporation  to  be  ef- 
fected at  a  meeting  of  which  only  fourteen  days'  notice 
need  be  given.  The  English  stockholders  and  ofiflcers  at- 
tempted to  reorganize  by  complying  with  the  terms  of  the 
English  statute,  regardless  of  the  by-law,  and  a  resolu- 
tion to  reorganize  was  passed  at  a  meeting  called  on  four- 
teen days'  notice.  The  American  stockholders,  who  did 
not  receive  this  notice  until  after  the  meeting  had  been 
held,  naturally  objected  to  this  high-handed  proceeding, 
and  carried  the  controversy  into  court,  where  it  was  held 
that  the  by-law  did  not  conflict  with  the  statute,  but  mere- 
ly added  to  its  requirements,  and  that  the  proceedings  of 
the  English  stockholders  were  void  for  want  of  compli- 
ance with  the  requirements  of  the  by-law.^* 

Conformity  to  charter. 

§  38.     By-laws  must  conform  to  the  charter.^^     That 
by-laws  contrary  to  the  charter  of  a  corporation  should  be 

23  Brown  v.  Republican  Mountain  Silver  Mines  (1893)   55  Fed.  7. 

24Hoblyn  v.  Rex  (1772)  2  Brown  Pari.  Cas.  329;  Rex  v,  Cutbush 
(1768)  4  Burrows,  2204;  Rex  v.  Toppenden  (1802)  3  East,  186;  Com- 
monwealth V.  Fisher  (1869)  7  Phila.  (Pa.)  264;  Presbyterian  Assun 
Fund  V.  Allen  (1886)  106  Ind.  593;  Bergman  v.  St.  Paul  Mut.  Bldg. 
Ass'n  (1882)  29  Minn.  278;  Commonwealth  v.  Gill  (1837)  3  Whart. 
(Pa.)  248;  St.  Luke's  Church  v.  Mathews  (1815)  4  Desaus.  Eq.  (S.  C.) 
578.  "Upon  the  same  principle,  a  by-law  which  restrains  and  limits 
the  powers  originally  given  to  the  governor  by  the  founder  himself, 
we  think  must  be  bad."  Lord  Chief  Justice  Tindal  in  Reg.  v.  Darling- 
ton Free  Grammar  School  Governors  (1844)  14  Law  J.  Q.  B.  67.  But 
see  Great  Falls  Mut.  Fire  Ins.  Co.  v.  Harvey  (1864)  45  N.  H.  292. 
(38) 


Ch.   3]  SUBJECT-MATTER  OF  BY-LAWS.  §   39 

void  follows  naturally  enough  from  the  relations  existing 
between  the  charter  and  the  by-laws.  The  charter  creates 
the  corporation,  the  corporation  creates  the  by-laws,  hence 
for  the  by-laws  to  do  away  with  the  charter  would  be  a 
sort  of  parricide.  Therefore,  a  by-law  conflicting  with  the 
charter  of  a  corporation  is  of  no  more  force  than  an  un- 
constitutional act  of  the  legislature.  Where  the  charter 
expressly  provides  in  what  cases  the  company  may  make 
by-laws,  its  right  to  make  by-laws  is  limited  to  the  casos 
named  in  the  charter.^^  Where  the  charter  gives  the  gen- 
eral power  to  make  by-laws,  that  general  power  is  still 
understood  to  mean  merely  the  riglit  to  pass  by-laws  not 
in  conflict  with  the  charter,  which  is  the  fundamental 
law  of  the  corporation.  Thus,  where  the  charter  of  an 
insurance  company  authorizes  it  to  insure  property  de- 
stroyed or  damaged  by  fire,  a  by-law  declaring  that  the  com- 
pany will  be  liable  for  losses  on  property  burned  or  dam- 
aged by  lightning  cannot  extend  tlie  company's  liability  to 
cases  where  property  is  merely  damaged  by  lightning, 
without  being  burned,  since  no  by-law  of  a  corporation 
can  enlarge  its  corporate  powers."® 

Satie. 

§  39.  So  a  benevolent  association  is  without  power 
to  enlarge  the  class  of  beneficiaries  prescribed  by  its  char- 
ter.2'^  Of  course  a  corporation  may  by  by-law  impose  on 
delinquent  members  fines  that  are  less  than  those  pre- 

25  Child  V.  Hudson's  Bay  Co.  (1723)  2  P.  Wms.  208. 

2B  Andrews  v.  Union  Mut.  Fire  Ins.  Co.  (1854)  37  Me.  256. 

27  Di  Messiah  v.  Gern  (1894)  10  Misc.  Rep.  30,  30  N.  Y.  Supp.  824. 

(39) 


§  39  BY-LAWS.  [Ch.  3 

scribed  in  the  charter.^^  But  a  by-law  inflicting;  forfeit- 
ure for  a  lesser  amount  of  arrears  than  prescribed  bj  the 
charter  is  invalid.^''  Yet  in  a  case  where  it  was  conceded 
that  an  incorporated  company  was  not  empowered  by  its 
charter  to  forfeit  the  shares  of  stockholders  for  nonpay- 
ment of  installments  for  the  purchase  price  of  the  stock,  it 
was  held,  nevertheless,  that  where,  after  the  organization 
of  the  company,  a  by-law  was  adopted  by  the  stockhold- 
ers declaring  such  forfeiture,  and  this  by-law  was  ac- 
quiesced in  by  the  stockholders,  a  stockholder  whose  stock 
had  been  forfeited,  and  whose  certificate  of  stock  contained 
a  printed  copy  of  the  by-law,  could  not  recover,  on  the 
winding  up  of  the  company,  the  amount  paid  on  his  stock.^® 
Where  the  charter  declares  what  persons  shall  be  eligible 
to  the  ofiBce  of  president  or  other  head  of  the  corporation, 
a  by-law  making  other  persons  eligible  to  the  office  is  in- 
valid.^^  An  exception  to  the  rule  requiring  by-laws  to 
conform  to  the  charter  exists  where  such  conformity  would 
result  in  the  violation  of  a  statute.  Thus,  where  the  char- 
ter of  a  corporation  contains  a  provision  repugnant  to  the 
statute  upon  the  same  subject,  the  association  may  adopt 
a  valid  by-law  in  harmony  with  the  statute,  although  it 
bo  inconsistent  with  the  charter.^^ 

28  Dupuy  V.  Eastern  B.  &  L.  Ass'n  (1896)  93  Va.  460,  25  S.  E.  537. 

29  Sherry  v.   Operative  Plasterers'   Mut.   Union    (1891)    139   Pa.   St 
470,  20  Atl.  1062. 

80  Lesseps  v.  Architects'  Co.  (1849)  4  La.  Ann.  316. 

81  Rex  V.  Bumstead  (1831)  2  Bam.  &  Adol.  699. 

82  Booz*  Appeal  (1885)  109  Pa.  St.  592. 
(40) 


Ch.  3]  SUBJECT-MATTER  OP  BY-LAWS.  §  40 

Reasonableness. 

§  40.  Bj-laws  must  be  reasonable.^'  This  rule,  how- 
ever, does  not  mean  that  an  inconvenient  or  troublesome 
by-law  is  always  void.^^  And  when  its  inconvenience  is 
in  issue,  "in  order  to  avoid  a  by-law  upon  the  ground  of  its 
being  unreasonable  because  of  some  inconvenience  that 
may  result  from  it,  it  should  appear  to  be  a  probable  in- 
convenience, for  one  can  hardly  predicate  of  any  law  that 
some  possible  inconvenience  may  not  result  from  it."^'' 

By-laws  which  do  not  apply  to  all  members  alike  are  un- 
reasonable, and  therefore  invalid,^^  especially  when  they 
contain  a  forfeiture.^^  In  order  to  be  reasonable,  by-laws 
must  be  certain,  must  be  directed  to  all  within  the  sphere 
of  their  operation,  and  must  operate  equally,^^  since  the 

88  Commissioners  v.  Gas  Co.  (1849)  12  Pa.  St.  318;  Kent  v.  Quick- 
silver Mining  Co.  (1879)  78  N.  Y.  182;  Commonwealth  v.  Gill  (1837) 
3  Whart.  (Pa.)  248;  People  v.  Throop  (1834)  11  Wend.  (N.  Y.)  186; 
St.  Luke's  Church  v.  Mathews  (1815)  4  Desaus.  Bq.  (S.  C.)  578;  State 
V.  Bank  of  Louisiana  (1827)  5  Mart.  (N.  S.;  La.)  327,  344;  Allnutt  v. 
Subsidiary  High  Court  of  Foresters  (1886)  62  Mich.  110,  28  N.  W. 
802;  Graham  v.  House  B.  &  L.  Ass'n  (Tenn.  Ch.  App.;  1898)  52  S.  W. 
1011.  See  Falcone  v.  Societa  Sarti  Italian!  di  Muntuo  Soccorso  (1899) 
61  N.  Y.  Supp.  873,  as  to  estoppel. 

84Weatherly  v.  Medical  &  Surgical  Soc.   (1884)   76  Ala.  567. 

85  Lord  Chief  Justice  Ellenborough  in  Rex  v.  Ashwell  (1810)  12 
East,  22. 

36  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc,  No.  1  (1879) 
41  Mich.  67,  1  N.  W.  931,  6  Am.  Corp.  Cas.  626. 

87Budd  V.  Multnomah  Street  Ry.  Co.   (1887)   15  Or,  418. 

88  Goddard  v.  Merchants'  Exchange  (1880)  9  Mo.  App.  295;  Domes 
V.  Supreme  Lodge,  K.  of  P.  (1898)  75  Miss.  466,.  23  So.  191;  Balti- 
more B.  &  L.  Ass'n  V.  Powhatan  Imp.  Co.   (1898)   87  Md.  59,  39  Atl. 

(41) 


§  41  BY-LAWS.  [Ch.  3 

power  of  making  by-laws,  in  whomsoever  it  may  reside,  is 
in  trust  for  the  benefit  of  all  the  corporators.^*  Thus,  a 
by-law  excluding  one  of  the  directors  from  all  knowledge 
of  the  corporation's  transactions  is  clearly  invalid  and 
void.^"  The  rule  that  by-laws  must  be  reasonable  in  order 
to  be  valid  does  not  apply  to  the  by-laws  of  voluntary  un- 
incorporated societies,*^  since  the  courts  never  interfere 
to  control  the  enforcement  of  the  by-laws  of  a  merely  vol- 
untary association  created  for  other  than  business  pur- 
poses,^^  so  long  as  they  are  not  illegal  or  contrarv  to  pub- 
lic policy.*^ 

Same. 

§  41.  A  by-law,  in  order  to  be  reasonable,  should  also 
be  for  the  common  benefit  of  all  the  corporators."**  Any 
by-law  that  disturbs  a  vested  right  is  not  reasonable;*'^ 
neither  is  one  that,  without  authority,  interferes  with  the 
dealings  of  third  persons,  and  prevents  the  purchase  and 
transfer  of  property.*®     A  by-law  enacted  by  the  trus- 

274;  Wierman  v.  International  B.  L.  &  I.  Union  (1896)  67  111.  App. 
550.  But  see  Shackelford  v.  Supreme  Conclave,  K.  of  D.  (1896)  98 
Ga.  295,  26  S.  E.  746. 

8»  Commonwealth  v.  Gill   (1837)   3  Whart.   (Pa.)   248. 

"People  V.  Throop  (1834)  12  Wend.  (N.  Y.)  186. 

4iElsas  V.  Alford  (1878)  1  City  Ct.  Rep.  (N.  Y.)  123.  But  see  Fritz 
V.  Muck  (1881)   62  How.  Pr.  (N.  Y.)   69. 

42  Robinson  v.  Yates  City  Lodge  (1877)  86  111.  599;  People  v.  Board 
of  Trade  (1875)  80  111.  137.     See  Austin  v.  Searing  (1857)  16  N.  Y.  112. 

43  Conriff  v.  Jamour  (1900)  31  Misc.  Rep.  729,  65  N.  Y.  Supp.  317. 

44  Commissioners  v.  Gas  Co.   (1849)   12  Pa.  St.  318. 
4BKent  V.  Quicksilver  Mining  Co.   (1879)   78  N.  Y.  182. 

48  Driscoll  T.  West  Bradley  &  C.  M.  Co.  (1874)  59  N.  Y.  102. 
(42) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §   42 

tees  of  a  corporation  will  not  be  set  aside  on  the  suit  of  a 
stockholder  on  the  ground  that  some  of  its  provisions  are 
unreasonable  and  in  excess  of  the  powers  of  the  trustees, 
so  long  as  the  trustees'  acts  are  reasonable  and  within  their 
powers.*^  And  where  a  loan  association  is  empowered  by 
charter  to  impose  fines  on  members  for  nonpayment  of 
assessments,  but  the  charter  is  silent  as  to  the  extent  of 
the  power,  the  validity  of  the  by-laws  will  be  tested  by 
their  reasonableness.^^ 

Same — Illustrations  of  reasonable  by-laws. 

§  42.  The  following  by-laws  have  been  held  by  the 
courts  to  be  reasonable :  A  by-law  providing  that  when  a 
third  or  more  of  the  directors  are  present  at  a  regular 
meeting  they  may  adjourn  the  meeting  to  another  day;^^ 
a  by-law  of  a  board  of  trade  making  the  purchaser  of 
grain  in  bulk  on  elevator  receipts  responsible  for  storage 
charges  accruing  before  the  sale;^*'  a  by-law  of  a  board 
of  trade  providing  for  the  expulsion  of  members  for 
breach  ot  any  contract  ;^^  a  by-law  imposing  a  fine 
upon  a  member  who  refuses  to  accept  an  election  to 
office  ;^^  a  by-law  of  a  news  association  forbidding  its 
members  from  receiving  or  publishing  the  regular  news 

4T  Burden  v.  Burden  (1899)  159  N.  Y.  287,  54  N.  E.  17. 

48Vierling  v.  Mechanics'  &  Traders'  S.,  L.  &  B.  Ass'n  (1899)  179 
111.  524,  53  N.  E.  979. 

49  Smith  V.  Law  (1860)  21  N.  Y.  296. 

ooGoddard  v.  Merchants'  Exchange  (1880)  9  Mo.  App.  290,  78  Mo. 
609. 

Bi  Dickenson  v.  Chamber  of  Commerce  (1871)  29  Wis.  45;  People  v. 
Chicago  Board  of  Trade  (1867)  45  111.  115. 

B2  Vintners'  Co.  v.  Passey  (1757)  1  Burrows,  235. 

(43) 


§  42  BY-LAWS.  [Oh.  3 

dispatches  of  other  associations;'''  a  by-law  of  a  board 
of  trade  forbidding  its  members  from  forming  a  public 
market  near  the  association's  rooms  ;^*  a  by-law  of  a  mu- 
tual benefit  society  depriving  a  member  of  sick  benefits 
unless  he  furnishes  the  sick  committee  with  a  doctor's  cer- 
tificate;''''  a  by-law  of  a  charitable  asylum  forbidding  the 
inmates  from  leaving  the  premises  without  permission  ;°^ 
a  by-law  of  a  mutual  benefit  society  providing  that  no  bene- 
fits shall  be  paid  w^hen  a  member's  death  is  caused  by  in- 
temperance or  debauchery  ;^^  a  by-law  of  a  beneficial  asso- 
ciation providing  that  members  engaging  in  the  saloon 
business  shall  forfeit  all  benefits  f^  a  by-law  of  a  stock  ex- 
change providing  that  the  seller  of  shares  shall  be  respon- 
sible for  the  genuineness  and  regularity  of  all  documents 
delivered,  and  for  such  dividends  as  may  be  received,  un- 
til reasonable  time  has  been  allowed  the  transferee  to  lodge 
such  documents  for  verification  and  registration  f^  a  regu- 
lation of  an  incorporated  agricultural  association  provid- 
ing that  stockholders  shall  have  one  vote  for  each  share 
held  by  them  up  to  ten  shares,  and  fixing  the  proportion 
which  their  votes  shall  bear  to  their  share  above  that  num- 
ber;"'® a  by-law  of  a  library  company  closing  the  library 

03  Matthews  ▼.  Associated  Press  (1893)  136  N.  Y.  333,  32  N.  E,  981; 
affirming  (1891)  15  N.  Y.  Supp.  887.     But  see  post,  §  77, 

6*  State  V.  Milwaukee  Chamber  of  Commerce  (1879)  47  Wis.  683. 
55  Harrington  t.  Workingmen's  Ben.  Ass'n  (1883)   70  Ga.  340. 

66  People  ▼.  Sailors'  Snug  Harbor  (1868)   54  Barb.  (N.  Y.)   532. 

67  St.  Mary's  Ben.  Soc,  v.  Burford  (1872)  70  Pa.  St.  321. 

68  Moerschbaecher  v.  Supreme  Council  of  R.  L.  (1900)  188  111.  9. 
6»  Smith  V.  Reynolds  (1892)  66  Law  T.  (N.  S.)  808. 

«o  Commonwealth  v.  Detwiller  (1890)   131  Pa.  St.  614,  18  Atl.  990. 
(44) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  43 

on  Sundays  f^  a  by-law  of  a  building  and  loan  association 
imposing  a  fine  of  ten  cents  per  share  for  each  and  every 
month  during  delinquency  f^  a  by-law  of  a  mutual  benefit 
association  providing  that  any  member  indebted  for  one 
year  should  be  in  arrears,  and  not  entitled  to  payment 
of  benefits  f^  sl  by-law  of  a  benefit  association  providing  for 
suspension  for  a  certain  period  after  arrears  are  paid;** 
a  by-law  of  a  building  society  forfeiting  membership  for 
default  in  monthly  dues  for  six  consecutive  months;*^  a 
regulation  of  a  lodge  requiring  applications  for  sick  bene- 
fits to  be  made  within  five  weeks  after  they  accrue  f^  a  by- 
law of  a  benefit  association  requiring  members  entitled 
to  sick  benefits  to  notify  the  secretary  within  twenty-four 
hours  after  illness,  whereupon  the  latter  would  send  the 
association's  physician  to  examine  him  and  certify  as  to 
his  illness,  said  doctor's  certificate  alone  to  be  proof  there- 
of ;^^  a  by-law  of  an  incorporated  secret  society  provid- 

61  In  re  Granger  (1870)  7  Phila.  (Pa.)  350. 

62  Roberts  v.  American  B.  &  L.  Ass'n  (1896)  62  Ark.  572,  36  S.  W. 
1085. 

63  Cowan  V.  New  York  Calet'onian  Club  (1899)  61  N.  Y.  Supp.  714. 

64  Rubino  V.  Fraterna  Ass'n  (1899)  29  Misc.  Rep.  339,  60  N.  Y.  Supp, 
461;  Jennings  v.  Chelsea  Division  B.  F.  Soc.  (1899)  28  Misc.  Rep.  556, 
59  N.  Y.  Supp.  862;  Alters  v.  Journeyman  Bricklayers'  Protective 
Ass'n  (1898)  43  Wkly.  Notes  Cas.  (Pa.)  336.  Contra,  Brady  v.  Coach- 
man's Benev.  Ass'n  (1891)  14  N.  Y.  Supp.  272. 

65  Card  v.  Carr  (1856)  1  C.  B.  (N.  S.)  197. 

66  Robinson  v.  Templar  Lodge,  No.  17  (1897)  117  Cal.  370,  49  Pac. 
170. 

67  Falcone  v.  Societa  Sarti  Italian!  di  Mutuo  Soccorso  (1899)  61  N. 
Y.  Supp.  873. 

(45) 


§  42  BY-LAWS.  [Ch.  3 

ing  that  a  member  must  be  initiated  before  he  can  acquire 
any  rights  in  the  society;^®  a  by-law  of  a  mutual  benefit 
insurance  society  investing  a  committee  with  power  to  de- 
termine the  rights  of  applicants  for  benefits,^^  and  making 
the  committee's  action  final  ;'^**  a  by-law  of  a  produce  ex- 
change providing  that,  if  the  complaint  committee  be  un- 
able to  conciliate  disputants,  or  induce  them  to  arbitrate, 
the  complaint  shall  be  referred  to  the  board  of  managers 
for  hearing  ;'^^  a  by-law  providing  that  ojffending  members 
shall  be  tried  before  a  select  committee  ;^^  a  by-law  provid- 
ing that  the  decision  of  the  society  expelling  a  member 
shall  be  final  f^  a  by-law  made  by  a  company  ot  free  fisher- 
men carrying  on  trade  in  partnership  preventing  mem- 
bers from  carrying  on  a  separate  trade  on  their  own  ac- 
count;'^* a  by-law  of  a  mutual  benefit  insurance  company 
providing  that,  if  any  member  shall,  after  admission,  en- 
gage in  any  occupation  which  bars  applicants,  he  shall 
stand  suspended  f^  a  by-law  of  a  hospital  association  pro- 

««  Matkki  V.  S«preme  Lodge,  K.  of  H.  (1891)  82  Tex.  301,  18  S.  W. 
306. 

6»Van  Poucke  v.  Netherland  St.  V.  P.  Sec.  (1886)  63  Mich.  378,  29 
N.  W.  863. 

■w  Canfield  v.  Great  Camp,  K.  of  M.  (1891)  87  Mich.  626,  49  N.  W. 
875;  Russell  v.  North  American  Ben.  Ass'n  (1898)  116  Mich.  699,  75 
N.  W.  187. 

TiHaebler  t.  New  York  Produce  Exchange  (1896)  149,  N.  Y.  414,  44 
N.  E.  87. 

«  Hussey  v.  Gallagher  (1878)  61  Ga.  92. 

TSAnacosta  Tribe  No.  12  v.  Murbach  (1858)  13  Md.  93. 

1*  Rex  V.  Free  F.  &  D.  of  Faversham  (1799)  8  Term  R.  352. 

76  Schmidt  v.  Supreme  Tent,  K.  of  M.    (1897)    97   Wis.   532,  73  N. 
W.  22. 
(46) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  43 

viding  that  only  physicians  who  comply  with  an  establish- 
ed code  of  medical  ethics  shall  practice  in  the  hospital  f^ 
a  by-law  declaring  that  no  lawyer  who  is  attorney  in  a  suit 
against  the  company  shall  be  eligible  as  a  director  f"^  a  by- 
law providing  that  any  oflEicer  elected  by  the  board  of  di- 
rectors may  be  removed  by  a  certain  vote  of  a  majority 
of  the  board  ;^^  and  a  by-law  of  a  board  of  trade  forbid- 
ding members,  under  penalty  of  expulsion,  from  dealing 
with  or  representing  those  who  are  gambling  in  grain.^® 

Same — Illustrations  of  unreasonable  by-laws. 

§  43.  The  following  by-laws  have  been  condemned  by 
the  courts  as  unreasonable:  A  by-law  providing  for  the 
expulsion  of  members  without  notice  to  them;^°  a  by-law 
of  a  mutual  benefit  society  forfeiting  the  funeral  benefits 
in  case  a  member's  dues,  though  fully  paid,  are  not  paid 
at  the  precise  time  when  due  f^  a  by-law  of  a  mutual  bene- 
fit society  providing  that  any  member  in  arrears  with  his 
dues  shall  be  deprived  of  benefits  for  three  months  after  he 
has  paid  up  all  his  arrears  f^  a  by-law  requiring  the  officers 

76  People  V.  Burnham  Hospital  (1896)  71  111.  App.  246. 

77  Cross  V.  West  Virginia,  C.  &  P.  Ry.  Co.  (1892)  37  W.  Va.  342,  16 
S.  E.  587. 

78  Ellis  V.  North  Carolina  Inst,  for  Deaf  &  Dumb  &  Blind  (1873)  (58 
N.  C.  423,  5  Am.  Corp.  Cas.  591. 

79  Board  of  Trade  v.  Riordan  (1900)  94  111.  App.  298. 

80  Fritz  V.  Muck  (1881)   62  How.  Pr.  (N.  Y.)  (^9. 

8iNelligan  v.  New  York  Typographical  Union  (1886)  2  City  Ct.  Rep. 
(N.  Y.)   261. 

szCartan  v.  Father  Matthew  U.  B.  Soc.  (1869)  3  Daly  (N.  Y.)  20; 
Brady  v.  Coachman's  Benev.  Ass'n  (1891)  14  N.  Y.  Supp.  272;  Buecking 
V.  Blum  Lodge   (1877)    1  City  Ct  Rep.   (N.  Y.)    51.     But  these  cases 

(47) 


§  43  BY-LAWS.  Ch.  3] 

to  treat  the  members  to  a  dinner  f^  a  by-law  of  a  board  of 
trade  requiring  the  members  to  submit  their  business  con- 
troversies to  arbitration  f*  a  by-law  of  a  building  and  loan 
association  imposing  a  fine  of  ten  per  cent  per  month  for 
failure  to  pay  dues;*"^  a  by-law  making  the  monthly  dues 
sixteen  times  as  large  as  before,  when  no  reason  for  the  in- 
crease existed  ;®*  a  by-law  forfeiting  the  stock  of  a  particu- 
lar member  for  nonpayment  of  assessments  without  affect- 
ing other  delinquents;^^  a  by-law  making  the  right  to  trans- 
fer stock  subject  to  the  approval  of  the  directors;^®  a  by- 
law restricting  the  transfer  of  shares  without  first  giving 
other  stockholders  and  the  corporation  an  option  to  pur- 
chase at  a  price  named  ;*^  a  by-law  providing  that  shares 
given  in  exchange  for  stockholders'  notes  and  mortgages 
should  not  be  transferred  unless  the  amount  of  such  notes 
was  paid;"®  a  by-law  providing  that  no  proxy  shall  be 

have  been  substantially  overruled  by  the  later  decisions.  Jennings 
V.  Chelsea  Division  B.  F.  Soc.  (1899)  28  Misc.  Rep.  556,  59  N.  Y.  Supp. 
862;  Rubino  v.  Fraterna  Ass'n  (1899)  29  Misc.  Rep.  339,  60  N.  Y.  Supp. 
461.  See,  too.  Alters  v.  Journeyman  Bricklayers'  Protective  Ass'n 
(1898)  43  Wkly.  Notes  Cas.  (Pa.)  336. 

8s  Framework  Knitters  v.  Green  (1702)  1  Ld.  Raym.  113;  Scriveners' 
Company  v.  Brooking  (1842)  2  Gale  &  D.  419,  3  Q.  B.  95. 

84  State  V.  Merchants'  Exchange  (1876)  2  Mo.  App.  96. 

«Lynn  v.  Freemansburg  B.  &  L.  Ass'n  (1887)  117  Pa.  St.  1,  11  AtL 
537. 

seHibernia  Fire  Engine  Co.  v.  Harrison  (1880)  93  Pa.  St.  268. 

sTBudd  V.  Multnomah  St.  Ry.  Co.  (1887)  15  Or.  418. 

88  Farmers'  &  Merchants'  Bank  v.  Wasson  (1878)  48  Iowa,  339. 

89  Victor  G.  Bloede  Co.  v.  Bloede  (1896)  84  Md.  129. 

80  Andes  Ins.  Co.  v.  Waters  (1876)  1  Wkly.  Law  Bui.  (Ohio)  172. 
(48) 


Ch .   3]  SUBJECT-MATTER  OF  BY-LAWS.  §  45 

voted  by  one  not  a  stockliolder  f^  a  by-law  of  an  association 
of  instrumental  musicians  that  no  member  shall  play 
in  any  engagement  with  any  person  not  belonging  to  the 
association;®^  and  a  by-law  of  a  merchants'  exchange  re- 
quiring members  to  submit  their  business  controversies 
to  arbitration,  on  pain  of  expulsion.®^ 

Appropriateness. 

§  44.  By-laws  must  be  germane  to  the  object  for  which 
the  corporation  is  formed.  This  rule  is  merely  an  appli- 
cation of  the  doctrine  that  by-laws  must  be  reasonable, 
since  it  is  not  reasonable  for  a  corporation  to  attempt  to 
regulate  matters  with  which  it  has  no  concern.  If  a  by- 
law is  clearly  alien  to  the  nature  of  a  corporation,  and  a 
departure  from  its  purpose,  such  a  by-law  is  ultima  vires 
and  void.®* 

Same — Illustrations. 

§  45.  Hence  a  by-law  of  a  mechanics'  benefit  society, 
that  each  contributing  member  should  be  assessed  ten 
cents  additional  every  three  months,  and  the  proceeds 
be  forwarded  to  another  association  to  aid  them  in  their 
endeavor  to  secure  legislation  restricting  immigration,  is 
alien  to  the  purpose  of  the  society.®^    A  corporation  or- 

»i  People's  Home  Savings  Bank  v,  Superior  Court   (1894)   104  Cal. 
649,  38  Pac.  452. 
92  Parker  v.  Toronto  Musical  Protective  Ass'n  (1900)   32  Ont.  305. 
83  state  V.  Union  Merchants'  Exchange  (1876)   2  Mo.  App.  96. 
»4  People  V.  Chicago  Board  of  Trade  (1867)  45  111.  118. 
05  Crumpton  v.  Pittsburg  Council,  No.  117   (1896)   1  Pa.  Super.  Ct. 
613,  38  Wkly.  Notes  Cas.  335. 

(49) 
Boisot  By  Laws — 4. 


§   45  BY-LAWS.  [Ch.  3 

ganized  for  the  promotion  of  literary  and  scientific  pur- 
suits has  no  power  to  pass  by-laws  confining  the  member- 
ship to  persons  of  a  particular  religious  faith,  and  sub- 
jecting the  affairs  of  the  corporation  to  ecclesiastical  con- 
trol.®® And  a  by-law  of  a  company  of  proprietors  of  a 
public  canal,  closing  navigation  on  Sunday,  under  pen- 
alty, is  void.®'^  But  an  association  of  tobacco  buyers 
and  warehousemen,  empowered  by  its  articles  to  regulate 
its  members  in  buying,  selling,  and  warehousing  tobacco, 
may  require  members  to  give  bond  to  secure  to  shippers 
the  proceeds  of  their  tobacco.®^  It  has  been  held  that 
where  a  society  is  incorporated  for  the  object  of  raising 
funds  for  the  relief  of  its  members  in  case  of  sickness  or 
misfortune,  a  by-law  declaring  the  villifying  of  any  of  its 
members  a  crime  against  the  society  punishable  by  expul- 
sion is  void,  since  such  a  by-law  is  clearly  unnecessary  for 
the  good  government  of  the  corporation.^®  And  it  seems 
probable,  from  another  case,  that  a  similar  by-law,  making 
slander  against  the  society  an  offense,  would  also  be  in- 
valid.^"*' On  the  other  hand,  it  has  been  held  that  a  pro- 
vision in  the  constitution  of  a  benefit  society,  providing 
that,  if  a  member  of  the  order  make  "to  the  chief  ranger,  or 

»8  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc,  No.  1  (1879) 
41  Mich.  67,  1  N.  W.  931,  6  Am.  Corp.  Cas.  626. 

97  Calder  &  Hebble  Navigation  Co.  v.  Pilling  (1845)  14  Mees.  &  W. 
76,  9  Jur.  377.  But  a  by-law  of  a  library  association  closing  its  library 
on  Sundays  is  valid.    In  re  GraHger  (1870)  7  Phila.  (Pa.)  350. 

98  Warren  v.  Louisville  Leaf  Tobacco  Exchange  (Ky.;  1900)  55  S.  W. 
912. 

89  Commonwealth  v.  St.  Patrick  Benev.  Soc.  (1810)  2  Bin.  (Pa.)  441. 
100  People  V.  Mechanics'  Aid  Soc.  (1870)  22  Mich.  86. 
(50) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §   46 

to  the  public,  an  accusation  against  a  sister  that  shall  be 
false  or  malicious,  she  shall  be  suspended  or  expelled,"  is 
not  void  as  having  nothing  to  do  with  the  transaction  of 
the  business  of  a  fraternal  insurance  society.^"^  An  asso- 
ciation formed  to  afford  relief,  comfort,  and  protection  to 
members  may  provide  by  by-law  for  payment  of  the  funeral 
expenses  of  members.^*'^ 

Rbgxjlation  of  Partictjlab  Subjects. 

DTities  of  officers. 

§  46.  One  of  the  principal  subjects  of  corporate  legis- 
lation by  means  of  by-laws  is  the  definition  and  the  regula- 
tion of  the  duties  of  the  officers  of  the  corporation.  These 
duties  are  almost  always  regulated  by  by-laws,  but  the  by- 
laws on  this  subject  do  not  seem  to  have  been  much  dis- 
cussed by  the  courts,  probably  for  the  reason  that  their 
provisions  have  not  often  given  rise  to  litigation.  A  by- 
law which  gives  control  of  the  corporate  affairs  to  persons 
outside  the  corporation  is  void.^*'^     Nor  can  the  directors 

lox  People  T.  Women's  Catholic  Order  of  Foresters  (1896)  162  111. 
78,  44  N.  E.  401,  affirming  Women's  Catholic  Order  of  Foresters  v. 
People  (1895)  59  111.  App.  390.  The  court  attempts  to  distinguish  this 
case  from  Commonwealth  v.  St.  Patrick  Benev.  Soc.  (1810)  2  Bin. 
(Pa.)  441,  by  drawing  a  distinction  between  villifying  a  member  and 
making  accusation  against  him,  and  also  by  drawing  a  distinction 
between  provisions  of  the  constitution  and  of  the  by-laws,  although 
the  constitution  in  question  was  not  the  corporate  charter. 

io2Lysaght  v.  St.  Louis  O.  S.  Ass'n  (1893)  55  Mo.  App.  538. 

!•»  People  ▼.  Young  Men's  Father  Matthew  T.  A.  B.  Soc.  No.  1. 
(1879)  41  Mich.  67,  1  N.  W.  931;  Allnutt  v.  Subsidiary  High  Court,  O. 
of  P.  (1886)  62  Mich.  110,  28  N.  W.  802, 

(51) 


§  47  BY-LAWS.  [Ch.  3 

by  by-law  confer  upon  a  committee  to  be  appointed  by  the 
president  all  the  powers  conferred  upon  them  by  the  char- 
^pj.  104  ]3y^  g^  banking  association  may,  by  its  by-laws, 
divide  its  business  into  several  distinct  departments,  and 
intrust  to  a  separate  committee  of  the  directors  exclusive 
charge  of  each  department.^ ^'^ 

Same. 

§  47.  It  has  been  held  that  a  by-law  of  a  railroad  com- 
pany which  provided  how  the  officers  of  the  company 
should  execute  promissory  notes  of  the  corporation  was 
valid.^®'  A  by-law  of  an  English  corporation  which  com- 
pelled the  officers,  uj)on  election,  to  give  a  dinner  to  all 
the  members  of  the  company,  was  held  invalid,  it  not  being 
shown  that  the  giving  of  such  dinner  was  in  any  way 
beneficial  to  the  society.^ ^'^  A  by-law  of  a  banking  cor- 
poration, authorizing  the  president  to  certify  checks  on 
the  bank,  does  not  authorize  him  to  certify  checks  drawn 
by  himself  ;^°*  and  a  by-law  giving  the  president  of  the 
corporation  general  charge  of  its  business  does  not  invest 
him  with  power  to  do  any  act  which  the  by-laws  expressly 
intrust  to  a  committee  of  the  directors.^^* 

io*Tempel  T.  Dodge  (1895)  89  Tex.  69. 

105  Palmer  t.  Yates  (1849)  3  Sandf.  (N.  Y.)  137. 

IOC  Came  v.  Brigham  (1854)  39  Me.  38. 

107  Scriveners'  Company  t.  Brooking  (1842)  2  Gale  &  D.  419,  3  Q.  B. 
95;  Framework  Knitters  Co.  v.  Green  (1697)  1  Ld.  Raym,  113;  Carter 
T.  Sanderson  (1828)  5  Bing.  79. 

losciaflin  v.  Farmers'  &  Citizens'  Bank  (1862)  25  N.  Y.  293. 

109  Twelfth  St.  Market  Co.  v.  Jackson  (1883)  102  Pa.  St.  269. 

(52) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  48  § 

Same. 

§  48.  Neither  tlie  president^ ^'^  nor  general  manager^^^ 
of  a  corporation  has  authority  to  sign  negotiable  paper 
for  third  persons.  Officers  empowered  to  purchase  prop- 
erty may  contract  for  payment,^ ^^  and  give  the  company's 
note  therefor.^  ^^  A  by-law  declaring  how  many  direct- 
ors must  be  present  at  a  directors'  meeting  in  order  to 
constitute  a  quorum  is  valid,  even  though  the  number 
named  be  less  than  a  majority  of  the  board.^^*  Corpora- 
tions may  enact  by-laws  compelling  their  officers  to  give 
bonds  for  the  faithful  performance  of  their  duties.^ ^'^  The 
power  of  filling  vacancies  being  incident  to  the  corpora- 
tion, it  may  by  by-law  prescribe  the  manner  in  which  such 
vacancies  shall  be  fiUed.^^®  A  corporation  may  declare  by 
by-law  that  no  lawyer  who  is  attorney  in  a  suit  against 
the  company  shall  be  eligible  as  a  director."^  Neither  a 
director^^^  nor  an  officer^^®  is  entitled  to  any  salary  un- 

110  Steiner  v.  Steiner  L.  &  L.  Co.  (1898)  120  Ala.  128,  26  So.  494. 

111  Dobson  V.  More  (1896)  164  111.  110,  45  N.  E.  243. 

112  Arapahoe  C.  &  L.  Co.  v.  Stevens  (1889)  13  Colo.  534,  22  Pac.  823. 
iisSiebe  v.   Joshua  Hendy  Machine-Works    (1890)    86   Cal.   390,   25 

Pac,  14. 

ii*Hoyt  V.  Sheldon  (1858)  3  Bosw.  (N.  Y.)  287;  Hoyt  t.  Thompson 
(1859)  19  N.  Y.  215.  These  two  cases  refer  to  the  same  by-law.  The 
question  is  an  interesting  one,  and  it  is  to  be  regretted  that  the  point 
has  not  been  also  passed  upon  by  the  courts  of  other  states. 

115  Savings  Bank  of  Hannibal  v.  Hunt  (1880)   72  Mo.  597. 

ii«  Kearney  v.  Andrews  (1854)  10  N.  J.  Eq.  70. 

117  Cross  V.  West  Virginia,  C.  &  P.  Ry.  Co.  (1892)  37  W.  Va.  342,  16 
S.  E.  587. 

118  Jones  V.  Vance  Shoe  Co.  (1899)  92  111.  App.  158. 

119  St.  Louis,  A.  &  S.  R.  Co.  v.  Crews  (1897)  75  IlL  App.  496. 

(53) 


§  49  BY-LAWS.  [Ch.  3 

less  the  same  is  provided  for  by  by-law ;  but  payment  to  a 
corporate  officer  of  a  salary  in  excess  of  that  prescribed 
by  by-law  is  not  void  as  an  ultra  vires  act,  but  merely 
voidable  at  the  suit  of  an  innocent  stockholder  injured 
thereby.^^^  A  further  discussion  of  this  class  of  by-laws, 
and  their  effect,  will  be  found  in  a  later  chapter.^^* 

Meetings  and  elections. 

§  49.  The  regulation  of  the  meetings  of  the  corpora- 
tion and  the  election  of  its  directors  and  officers  is  another 
important  subject  of  by-law  legislation.  Whenever  these 
matters  are  not  regulated  by  the  charter  or  by  prescrip- 
tion, the  right  to  regulate  them  by  by-laws  is  unquestion- 
able.^^^ By-laws  may  also  regulate  the  mode  of  calling 
as  well  as  of  holding  meetings  of  stockholders.^^'  In  a 
case  in  Maine  it  appeared  that  one  by-law  of  a  certain  cor- 
poration provided  that  the  officers  of  the  corporation 
should  hold  office  for  one  year,  and  until  their  successors 
were  elected  and  qualified.  Another  by-law  provided  that 
the  notice  of  meetings  should  specify  the  business  to  be 
transacted  at  such  meetings.  It  was  held  that  the  elec- 
tion of  officers  might  be  held  at  the  annual  meeting  with- 
out being  specified  in  the  notice,  since  the  by-law  which 
prescribed  the  business  to  be  done  at  the  annual  meeting 

to  be  the  election  of  the  officers  operated  as  sufficient  no- 
tice.124 

120  Brown  v.  De  Young  (1897)  167  111.  549,  47  N.  B.  863. 

121  See  post,  §§  106,  107. 

i22Newling  v.  Francis  (1789)  3  Term  R.  189. 

123  Taylor  v.  Griswold  (1834)  14  N.  J.  Law,  222. 

124  Sampson  v.  Bowdoinham  Steam  Mill  Corp.  (1853)  36  Me.  82. 
(54) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  51 

Same — Kotice. 

§  50.  Where  the  by-laws  fix  the  time  and  place  of  hold- 
ing corporate  meetings,  but  do  not  provide  for  giving  no- 
tice of  such  meetings,  no  notice  of  the  meeting  is  neces- 
sary.^ ^'^  Where  a  by-law  requiring  written  notice  of  spe- 
cial meetings  of  the  directors  is  silent  as  to  the  manner 
of  serving  the  notice,  it  is  immaterial  how  the  notice  is 
served,  provided  it  is  shown  that  notice  of  the  meeting 
was  actually  received  ;^^^  though  the  rule  in  regard  to 
notices  that  may  affect  a  member's  pecuniary  rights  is 
that,  in  the  absence  of  any  provision  in  the  by-laws  as  to  the 
manner  of  serving  such  notice,  the  service  must  be  personal, 
as  at  common  law.^^^  And  when  all  the  directors  are  pres- 
ent at  a  special  meeting,  the  fact  that  notice  of  such  meet- 
ing was  not  given  as  required  by  the  by-laws  is  immate- 
rial.^^^  So,  also,  a  member  of  a  society  who  attends  and 
participates  in  a  meeting  without  objection  cannot  after- 
wards complain  that  notice  of  the  meeting  was  not  given 
as  required  by  the  by-laws.^  ^^ 

Same — ^Unauthorized  meetings. 

§  51.    Where  the  by-laws  of  a  corporation  provide  that 

125  Morrill  v.  Little  Falls  Mfg.  Co.  (1893)  53  Minn.  371,  55  N.  W.  547. 

126  Ashley  Wire  Co.  v.  Illinois  Steel  Co.  (1896)  164  111.  149,  45  N.  E. 
410. 

127  People  T.  Hoboken  Turtle  Club  (1891)  14  N.  Y.  Supp.  76;  Fields 
V.  United  Brotherhood  of  C.  &  J.  (1895)  60  111.  App.  258. 

128  Minneapolis  Times  Co.  v.  Nimocks  (1893)  53  Minn.  381,  55  N. 
W.  546.  In  some  states  there  is  an  express  provision  of  statute  to  that 
effect. 

i29Helbig  V.  Rosenberg  (1892)  86  Iowa,  159,  53  N.  W.  111. 

(55) 


§  51  BY-LAWS.  [Ch.  3 

all  meetings  of  the  directors  shall  be  specially  called,  a 
meeting  of  a  part,  although  a  majority,  of  the  board  of  di- 
rectors not  called  in  pursuance  of  the  by-laws,  is  not  a 
lawful  meeting.^^*'  Where  the  by-laws  of  a  social  club 
provide  for  special  meetings  of  the  trustees  on  notice  in 
writing  to  each  member  of  the  board,  and  authorize  the 
expulsion  of  a  member  at  such  a  meeting  by  a  two-thirds 
vote  of  those  present,  the  board  has  no  authority  to  expel 
a  member  at  a  special  meeting,  of  which  one  of  the  mem- 
bers, who  was  not  present,  did  not  have  written  notice.^^^ 
Under  charter  provisions  requiring  that  alteration  of  the 
by-laws  shall  be  made  only  at  a  general  meeting  of  the 
members  convened  by  public  notice,  as  in  the  case  of  elec- 
tion of  directors,  and  that  the  president,  when  required 
by  twenty  members,  shall  call  the  general  meeting  by  giv- 
ing notice,  as  in  the  case  of  directors,  for  the  transaction  of 
such  business  as  may  be  specified  in  such  notice,  the  by- 
laws may  not  be  changed  at  an  annual  meeting,  where  no- 
tice is  given  only  of  the  election  of  directors.^  ^^  "N^^here 
the  statute  and  the  by-laws  provided  that  notices  of  special 
meetings  should  be  given  on  the  order  of  the  president,  or, 
if  there  were  none,  on  the  order  of  two  directors,  it  was 
held  that,  while  there  was  a  president  competent  to  act,  a 
special  meeting  called  by  two  directors,  on  the  refusal  of 
the  president  to  make  the  call,  was  illegal.^ ^^     In  a  New 

130  Mast  Buggy  Co.  v.  Litchfield  F.  H.  &  I.  Co.  (1893)  55  111.  App.  98. 

131  People  V.  Greenwood  Lake  Ass'n  (1892)   18  N.  Y.  Supp.  491. 

132  Mutual  Fire  Ins.  Co.  v.  Farquhar  (1898)   86  Md.  668,  39  Atl.  527. 

133  Smith  V.  Dorn  (1892)  96  Cal.  73,  30  Pac.  1024. 
(56) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  51 

Jersey  case,  it  appeared  that  a  special  meeting  of  the 
stockholders  of  a  company  organized  under  the  {general  act 
was  called  on  less  than  the  required  ten  days'  notice  to 
amend  the  by-laws  by  increasing  the  number  of  directors, 
and  to  elect  those  who  should  be  added.  At  the  meeting 
every  share  of  the  stock  of  the  company  was  represented 
and  voted,  and  the  by-laws  were  so  amended.  The  addi- 
tional directors  were  then  chosen  by  the  votes  of  a  ma- 
jority in  number  and  interest  of  all  the  stockholders,  the 
minority  refusing  to  vote.  No  stock  had  been  transferred 
within  twenty  days  preceding  the  meeting.  It  was  held 
that,  notwithstanding  its  informality,  the  election  would 
not  be  disturbed.^ ^*  The  fact  that  an  annual  meeting  re- 
quired by  by-law  to  be  held  in  a  certain  month  was  omitted 
through  neglect  does  not  preclude  holding  the  meeting  at 
a  later  time.^^^  Where  the  by-laws  authorize  the  presi- 
dent to  call  special  meetings  of  the  directors  upon  giving 
notice  of  the  time  and  place  thereof,  and  such  place  is 
not  prescribed  by  by-law,  the  president  may  call  a  special 
meeting  at  a  place  other  than  the  principal  place  of  busi- 
ness of  the  corporation.^^*  In  a  New  York  case  it  ap- 
peared that  the  statute  required  directors  to  be  chosen 
at  a  place  fixed  by  the  by-laws.  The  principal  office  of  the 
corporation  was  established  in  Waterford,  but  the  defend- 
ant was  chosen  director  at  a  meeting  held  in  Troy.  It 
did  not  appear  from  the  evidence  that  any  particular  place 

134  In  re  A.  A.  Griffing  Iron  Co.  (1898)  63  N.  J.  Law,  168,  41  Atl.  9C1. 

135  Scanlan  v.  Snow  (1894)  2  App.  D.  C.  137. 

136  Corbett  v.  Woodward  (1879)  5  Sawy.  403,  Fed.  Cas.  No.  3,223. 

(57) 


§   52  BY-LAWS.  [Ch.3 

was  fixed  for  the  meeting  by  the  by-laws,  but  it  was  shown 
that  the  company  had  an  office  in  Troy,  and  that  stock- 
holders' meetings  had  been  held  there  for  twelve  years.  It 
was  held  that  the  defendant's  election  was  not  invalid.^*^ 

Same — Votes  and  proxies. 

§  52.  As  a  general  rule,  a  by-law  authorizing  the  mem- 
bers or  stockholders  to  vote  by  proxy  at  an  election  of  di- 
rectors is  valid,^^^  although  it  has  been  held  in  New  Jersey 
that  such  a  by-law  is  not  good  in  the  case  of  bridge  com- 
panies, on  the  theory  that  a  bridge  company  is  a  quasi  pub- 
lic corporation.^*®  A  by-law  restricting  proxies  to  stock- 
holders has  been  declared  invalid.^**'  Where  the  by-laws 
provide  that  a  majority  vote  of  the  directors  shall  deter- 
mine the  action  of  that  body,  it  has  been  held  that  a  ma- 
jority of  the  whole  number  of  directors  must  be  present; 
but  if  a  majority  of  those  present  concur  in  a  resolution,  it 
is  binding.^^^  A  regulation  of  an  incorporated  associa- 
tion providing  that  stockholders  shall  have  one  vote  for 
each  share  held  up  to  ten  shares,  and  fixing  the  proportion 

137  Union  Nat.  Bank  v.  Scott  (1900)  53  App.  Div.  65,  66  N.  Y,  Supp. 
145. 

138  state  V.  Tudor  (1812)  5  Day  (Conn.)  329;  People  v.  Crossley 
(1873)  69  111.  196.  In  Philips  v.  Wickham  (1829)  1  Paige  (N.  Y.) 
590,  598,  this  seems  to  have  been  considered  a  doubtful  question. 

139  Taylor  v.  Griswold  (1834)  14  N.  J.  Law,  227.  Contra,  State  t. 
Tudor  (1812)  5  Day  (Conn.)  329. 

140  In  re  L4ghthAU  Mfg.  Co.  (1888)  47  Hun  (N.  Y.)  258;  People's 
Home  Savings  Bank  v.  Superior  Court  (1894)  104  Cal.  649,  38  Pac.  452. 

"1  Foster  v.  Mullanphy  Planing-Mill  Co.   (1887)   92  Mo.  79,  4  S.  W. 
260. 
(58) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  53 

which  their  votes  shall  bear  to  their  shares  when  above 
that  number,  is  valid.^"*^  Where  the  power  of  electing  di- 
rectors is  lodged  by  statute  in  the  hands  of  the  stock- 
holders, a  corporation  cannot  by  its  by-laws  either  give  or 
take  it  away.^^^  Where  the  charter  declares  that  the  act 
of  a  majority  of  the  trustees  duly  assembled  as  a  board 
shall  be  valid  as  a  corporate  act,  a  by-law  which  authorizes 
the  election  of  a  trustee  to  fill  a  vacancy  by  a  less  num- 
ber than  a  majority  is  void  as  contrary  to  the  charter.^*^ 

Same — Quorum. 

§  53.  A  by-law  which  provides  that,  where  one-third  or 
more  of  the  directors  are  present  at  the  regular  meeting, 
they  shall  have  power  to  adjourn  to  another  day,  is  rea- 
sonable.^^*^  And  a  by-law  which  declares  that  five  direct- 
ors, including  the  president,  or  seven  directors  without 
him,  shall  constitute  a  quorum  for  the  transaction  of  the 
ordinary  business  of  the  company,  is  valid,  although  the 
company's  charter  provides  that  the  corporate  powers  of 
the  company  shall  be  exercised  by  a  board  of  directors, 
to  consist  of  twenty-three  persons.^*®  A  by-law  which 
provides  for  an  annual  meeting  of  a  corporation,  at  which 
the  officers  of  the  company  shall  be  chosen,  does  not  neces- 
sarily limit  the  business  that  may  be  transacted  at  such 

142  Commonwealth  v.  Detwiller  (1890)  131  Pa.  St.  614,  18  Atl.  990. 
14S  Brewster  v.  Hartley  (1869)  37  Cal.  24,  1  Am.  Corp.  Cas.  237. 

144  State  V.  Curtis  (1874)  9  Nev.  336. 

145  Smith  V.  Law  (1860)  21  N.  Y.  296. 

i4eHoyt  V.  Sheldon  (1858)  3  Bosw.  (N.  Y.)  287;  Hoyt  v.  Thompson 
(1859)   19  N.  Y.  215. 

(59) 


§  54  BY-LAWS.  [Ch.  3 

meeting  to  the  election  of  officers.^*^  Wliere  the  act  under 
which  the  corporation  is  organized  declares  what  shall  be 
the  qualifications  of  members  who  are  allowed  to  vote  for 
officers,  a  corporation  cannot  by  by-law  impose  additional 
qualifications;^*^  and  a  by-law  proyiding  and  authorizing 
any  stockholder  to  challenge  votes,  and  allow  the  inspect- 
ors to  require  the  person  whose  vote  is  challenged  to 
make  answer  under  oath  to  the  matters  set  up  in  the  chal- 
lenge, or  else  lose  his  vote,  is  void.^**  It  is  proper,  how- 
ever, to  provide  by  by-law  that  the  president  of  a  corpora- 
tion shall  appoint  inspectors  of  election,  and  that  ballots 
on  which  is  written  anything  except  the  names  of  candi- 
dates shall  not  be  counted.^^®  Under  a  by-law  which  re- 
quires a  majority  of  the  stock  to  be  represented  at  a  meet- 
ing before  any  business  is  transacted,  a  stockholders'  meet- 
ing at  which  less  than  a  majority  is  represented  cannot 
elect  officers.^ ^^ 

Assessments  and  dnes. 

§  54.     The  regulation  of  assessments  on  stock  and  of 
dues  payable  by  the  members  is  another  matter  that  is 

147  Warner  v.  Mower  (1839)  11  Vt.  392. 

148  People  V.  Phillips  (1845)   1  Denio  (N.  Y.)   398. 

149  People  V.  Kip  (1822)  4  Cow.  (N.  Y.)  382. 

150  Commonwealtli  v.  Woelper  (1817)  3  Serg.  &  R.  (Pa.)   31. 

161  Ellsworth  Woolen  Mfg.  Co.  y.  Faunce  (1887)  79  Me.  440.  In  this 
case  there  was  present  at  the  meeting  a  majority  of  all  the  stock  that 
had  been  issued,  but  not  a  majority  of  all  the  authorized  stock.  But 
this  case  is  qualified  so  as  to  be,  in  effect,  orerniled  by  the  later  case 
of  Castner  v.  TwitcheU-Champlin  Co.  (1898)  91  Me.  524,  40  Atl.  558. 
(60) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  55 

often  regulated  by  by-laws.  But  wbere  the  stockholders 
are  not  personally  liable  for  assessments  without  an  ex- 
press provision  therefor,  a  by-law  which  provides  that,  if 
the  stock  of  a  delinquent  stockholder  shall  not  sell  for 
enough  to  pay  the  assessment  thereon,  the  stockholder 
shall  be  personally  liable  to  the  corporation  for  the  de- 
ficiency, is  invalid.^ ^^  The  dues  imposed  upon  members 
should  be  reasonable.  In  a  case  in  Pennsylvania  it  ap- 
peared that  a  volunteer  fire  company  had  been  incorporat- 
ed for  the  promotion  of  the  public  good  by  the  extinguish- 
ment of  fires.  By  reason  of  the  creation  of  a  paid  fire 
department,  the  company  ceased  to  run  to  fires,  and  it  then 
sold  its  engine  and  leased  its  house.  After  this  a  by-law 
was  passed  increasing  the  monthly  dues  payable  by  the 
members  from  twelve  and  a  half  cents  per  month  to  two 
dollars  per  month,  and  the  court  held  that  such  by-law  was 
invalid.^^^ 

Same — ^Reasonableness. 

§  55.  It  was  held  in  an  English  case  that  a  by-law  of 
an  incorporated  company  of  tobacco  pipe  makers,  provid- 
ing that  every  freeman  using  or  not  using  the  trade  of  pipe 
making  should  pay  a  yearly  contribution  to  the  company, 
was  bad,  inasmuch  as  it  did  not  appear  that  any  rightful 
expenditure  of  the  company  required  such  a  tribute.^^* 

152  Kennebec  &  P.  R.  Co.  v.  Kendall  (1850)  31  Me.  476;  Jay  Bridge 
Corp.  V.  Woodman  (1850)  31  Me.  573. 

i53Hibernia  Fire  Engine  Co.  v.  Harrison  (1880)  93  Pa.  St.  268. 

154  Company  of  Tobacco  Pipe  Makers  v.  WoodrofEe  (1828)  7  Bam. 
&  C.  838. 

(61) 


§  56  BY-LAWS.  [Ch.  3 

A  by-law  of  an  insurance  association  authorizing  sus- 
pension from  benefits  for  failure  to  pay  assessments  may 
lawfully  provide  that  payments  after  such  suspension  shall 
not  constitute  a  waiver  of  the  by-law.^^'  When  the  by- 
laws of  a  benefit  society  provide  that  members  shall  be 
notified  of  assessments,  but  do  not  state  how  they  are  to 
be  notified,  notice  must  be  personal,  since  the  effect  of  neg- 
lecting such  notice  may  result  in  pecuniary  loss.^^®  When 
the  charter  provides  for  assessments,  but  does  not  say  who 
shall  make  them,  the  directors  may  by  by-law  authorize 
their  executive  committee  to  make  them.^^'^ 

Transfer  of  stock, 

§  56.  The  mode  of  transferring  stock  is  also  frequently 
regulated  by  the  by-laws.  It  has  been  held  that  a  transfer 
of  stock  not  entered  on  the  books  of  the  corporation,  in  ac- 
cordance with  its  by-laws,  is  invalid  as  against  the  cor- 
poration,^^® and  does  not  constitute  the  transferee  a  mem- 
ber of  the  corporation  ;^^^  and  where  the  by-laws  prescribe 

iBo  Schmidt  v.  Supreme  Tent,  K.  of  M.  (1897)  97  Wis.  532,  73  N. 
W.  22. 

156  Fields  V.  United  Brotherhood  of  C.  &  J.  (1895)  60  111.  App.  258; 
Wachtel  v.  Noah  W.  &  O.  Benev.  Sec.  (1881)  84  N.  Y.  28,  38  Am.  Rep. 
478. 

157  Fee  V.  National  Masonic  Ace.  Ass'n  (1900)  110  Iowa,  271,  81  N. 
W.  483. 

158  Stockwell  V.  St.  Louis  Mercantile  Co.  (1880)  9  Mo.  App.  133. 
But  this  would  not  be  true  if  the  corporation  had  in  any  manner 
waived  the  requirement.     Isham  v.  Buckingham  (1872)   49  N.  Y.  216, 

221. 

159  Marlborough  Mfg.  Co.  v.  Smith  (1818)  2  Conn.  583;  Vansands 
V.  Middlesex  County  Bank  (1857)  26  Conn.  153. 

(62) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  57 

that  transfers  of  stock  shall  be  under  seal,  a  transfer 
not  under  seal  confers  on  the  transferee  no  right  to  com- 
pel the  corporation  to  issue  a  new  certificate  to  him.^"** 
A  by-law  which  provides  that  transfers  of  stock  shall  be 
made  by  assignment  on  the  treasurer's  book,  either  in  per- 
son or  by  attorney  on  surrender  of  the  certificate  and  the 
issue  of  a  new  certificate,  requires  a  written  assignment 
on  the  treasurer's  book  subscribed  by  the  assignor  or  his 
authorized  attorney  to  constitute  a  transfer  of  stock.^^^ 
And  where  a  by-law  provides  that  no  shares  of  stock  shall 
be  transferred  on  the  books  of  the  corporation  until  the 
certificate  is  surrendered  or  shown  to  be  lost,  the  heirs  of 
a  deceased  stockholder  cannot  compel  the  corporation  to 
issue  a  new  certificate  to  them  until  they  have  either  sur- 
rendered the  former  certificate,  or  shown  it  to  be  lost.^^^ 

Same — Irregnilar  transfers. 

§  57.  In  the  absence  of  by-laws  regulating  the  mode 
in  which  stock  shall  be  transferred,  transfers  must  be  made 
in  the  manner  prescribed  by  the  usages  of  the  company,  or 
as  set  forth  in  its  certificates  of  stock.^*'^  And  although 
the  by-laws  require  the  entry  of  transfers  of  shares  to  bo 
made  on  a  stock  ledger,  if  in  fact  no  stock  ledger  is  kept, 
and  a  transfer  is  entered,  according  to  the  custom  of  the 
company,  on  the  subscription  list,  and  an  assignment  is 

160  Bishop  V.  Globe  Co.  (1883)  135  Mass.  132. 

161  Marlborough  Mfg.  Co.  v.  Smith  (1818)  2  Conn.  583;  Lippitt  v. 
American  Wood  Paper  Co.  (1885)  15  R.  I.  141,  23  Atl.  111. 

182  state  V.  New  Orleans  &  C.  R.  Co.  (1878)  30  La.  Ann.  308. 
188  state  V.  Mclver  (1870)  2  S.  C.  25. 

(63) 


§  58  BY-LAWS.  [Ch.  3 

indorsed  on  the  shares,  and  a  new  certificate  issued  by  the 
company,  the  latter  cannot  deny  the  validity  of  the  trans- 
fer.^ ^*  Where  stock  of  a  corporation  is  by  charter  or  by- 
law transferable  only  on  its  books,  a  purchaser  receiving 
a  certificate  gets  the  entire  interest  of  the  seller ;  but  if  he 
neglects  to  have  the  transfer  made  on  the  books  of  the  cor- 
poration until  after  such  stock  has  been  transferred  to  a 
bona  fide  holder  without  notice,  he  loses  the  right  to  have 
the  transfer  made  to  him,  but  the  corporation  would  be 
liable  to  the  holder  of  such  certificate  for  permitting  the 
stock  to  which  he  was  entitled  to  be  transferred  to  an- 
other.^ ^^  Of  course  by-laws  requiring  transfers  of  stock 
to  be  made  at  the  oflice  of  the  company  upon  surrender  of 
the  old  certificate  do  not  preclude  an  equitable  assignment 
by  delivery.^** 

Same — Same. 

§  58.  As  between  the  parties  to  the  transaction,  the 
sale  of  stock  accompanied  by  delivery  of  the  certificate 
passes  good  title  to  the  vendee  in  spite  of  a  by-law  forbid- 
ding a  transfer  of  stock  by  mere  delivery  of  the  stock  cer- 
tificate without  a  transfer  on  the  books  of  the  company,^^'^ 

184  Stewart  v.  Walla  Walla  P.  &  P.  Co.  (1889)  1  Wash.  St.  521,  20 
Pac.  605. 

165  New  York  &  N.  H.  R.  Co.  v.  Schuyler  (1865)  34  N.  Y.  30. 

166  Reed  V.  Copeland  (1883)   50  Conn.  472,  47  Am.  Rep.  663. 

167  Moore  v.  Bank  of  Commerce  (1873)  52  Mo.  379;  Wilson  v.  St. 
Louis  &  S.  F.  Ry.  Co.  (1891)  108  Mo.  588,  18  S.  W.  286;  Sargent  v. 
Essex  Marine  Ry.  Co.  (1829)  9  Pick.  (Mass.)  201;  Sargent  v.  Franklin 
Ins.  Co.  (1829)  8  Pick.  (Mass.)  90;  McNeil  v.  Tenth  Nat.  Bank  (1871) 
46  N.  Y.  331;  Isham  v.  Buckingham  (1872)  49  N.  Y.  222;  Cornick  v. 
(64) 


Ch.3]  SUBJECT-MATTER  OF  BY-LAWS.  §59 

or  in  spite  of  by-laws  which  declare  that  stock  can  only 
be  transferred  upon  the  surrender  of  the  certificate  to  the 
president  or  secretary,  and  its  cancellation  by  them.^** 
The  vendee  in  such  case  acquires  by  his  purchase  an  equi- 
table title  to  the  stock  purchased  by  hini,^*"^  but  he  holds 
Buch  title  subject  to  all  equitable  rights  of  the  corporation 
against  his  vendor  in  regard  to  such  stock/ ^^  and  the  ven- 
dor remains  subject  to  the  liabilities  of  a  stockholder.^ ^^ 
Where  the  owner  of  stock  has  assigned  and  transferred 
the  certificate  issued  to  him,  and  the  corporation,  without 
valid  reason,  refuses  to  make  the  transfer,  this  amounts  to 
a  waiver  of  the  requirements  as  to  transfer,  and  the  corpo- 
ration is  bound  to  recognize  the  title  of  the  assignee  as  If 
the  formal  transfer  had  been  made.^^^  Although  the  by- 
laws of  a  mutual  insurance  company  contemplate  the  as- 
signment of  policies  in  writing,  and  the  policies  provide 
that  assignments  shall  be  made  in  accordance  wit^  the  by- 
laws, an  assignment  not  in  writing:  carries  the  equitable 
title  to  a  policy.^  ^^ 

Same — Restriction  of  transfer. 

§  59.     The  power  to  regulate  the  transfer  of  stock  does. 

Richards  (1879)  3  Lea  (Tenn.)  6;  Chemical  Nat.  Bank  v.  Colwell 
(1892)   132  N.  Y.  250,  30  N.  E.  644. 

lesseeligson  v.  Brown  (1884)  61  Tex.  114. 

189  Planters'  &  Merchants'  Mut.  Ins.  Co.  v.  Selma  Savings  Bank 
(1879)  63  Ala.  585;  Reed  v.  Copeland  (1883)  50  Conn.  472,  47  Am. 
P-^.  663. 

nostebbins  v.  Phoenix  Fire  Ins.  Co.  (1833)  3  Paige  (N.  Y.)  350. 

171  Dane  v.  Young  (1872)   61  Me.  160. 

112  Robinson  v.  National  Bank  of  New  Berne  (1884)   95  N.  Y.  637. 

««  Cannon  v.  Fanufirg'  Mut  FijCQ  Ass'n  U899)  58  N.  J.  Eq.  102,  43 
A«L  281. 

*»Olsot  By  Laws — 5. 


§  59  BY-LAWS.  [Ch.  3 

not  include  the  poAxer  to  restrict  such  transfer,  and  there- 
fore a  by-law  prohibiting?  the  alienation  of  stock  is  void,^^* 
and  so  is  a  by-law  which  provides  that  the  validity  of  a 
transfer  of  stock  shall  depend  upon  the  approval  and  ac- 
ceptance of  the  directors,^ '^  or  upon  the  consent  of  all  the 
stockholders,^ ^^  since  such  by-laws  would  impose  an  un- 
warrantable restriction  upon  the  sale  of  personal  prop- 
erty, and  would  therefore  be  in  restraint  of  trade.     A  by- 
law prohibiting  the  transfer  of  stock  except  to  the  corpo- 
ration is  void,  although  indorsed  on  the  certificates. ^"^^     A 
statute  authorizing  corporations  to  make  by-laws  con- 
sistent with  the  laws  of  the  state  does  not  authorize  a  by- 
law requiring  stockholders,  before  selling  their  stock,  to 
offer  it  first  to  the  corporation,  since  a  corporation  can- 
not, in  the  absence  of  express  authority,  restrict  the  right 
of  a  stockholder  to  dispose  of  his  stock.^'^*     So  a  by-law 
requiring  that  stockholders  shall  first  offer  it  to  the  di- 
rectors,^"^^  or  to  the  other  stockholders  at  a  price  named,^®® 
is  an  unreasonable  restraint  upon  the  alienation  of  prop- 
erty.    A  by-law  of  a  bank  providing  that  all  stock  sold  or 

174  Moore  v.  Bank  of  Commerce  (1873)  52  Mo.  379. 

175  Farmers'  &  Merchants'  Bank  v.  Wasson  (1878)  48  Iowa,  339. 

176  In  re  Klaus  (1886)   67  Wis.  401. 

177  Herring  v.  Ruskin  Co-operative  Ass'n  (Tenn.  Ch.  App.;   1899)   52 
S.  W.  327. 

ITS  Ireland  v.  Globe  Milling  Co.    (1898)    21  R.  I.  9,  41  Atl.  258;   Ire- 
land V.  Globe  M.  &  R.  Co.  (1895)   19  R.  I.  180,  32  Atl.  921. 

179  Brinkerhoff-Farris  T.  &  S.  Co.  v.  Home  Lumber  Co.    (1893)    118 
Mo.  447,  24  S.  W.  129. 

180  Victor  G.  Bioede  Co.  v.  Bloede  (1896)  84  Md.  129,  33  L.  R.  A.  107. 

(66) 


Oh.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  60 

transferred  shall  be  conveyed  with  the  express  condition 
that  it  will  be  voted  in  favor  of  all  propositions  submitted 
bv  the  directors  to  increase  the  capital  stock  of  the  bank 
is  void.^*^ 

Same — Regulating  manner  of  transfer. 

§  60.  A  charter  which  prescribes  that  the  stock  shall 
be  transferable  only  on  the  books  of  the  company,  in  such 
manner  as  the  company  shall  by  by-law  direct,  is  sufficient 
to  authorize  the  passage  of  a  by-law  providing  that  the 
board  of  directors  shall  prescribe  the  form  of  transfer  to 
be  registered  by  the  clerk  upon  the  books  of  the  company, 
and  requiring  all  transfers  to  be  made  in  the  prescribed 
form,  and  registered.^*^  In  a  case  decided  by  the  supreme 
court  of  the  United  States,  it  appeared  that  a  by-law  of  a 
national  bank  declared  that  its  shares  of  stock  should  be 
transferable  subject  to  the  restrictions  of  the  currency  act. 
Afterwards  congress  repealed  the  section  of  the  currency 
act  containing  such  restrictions,  but  no  amendment  of  the 
by-law  was  made  by  the  bank.  The  court  held  that  the  by- 
law had  no  effect  to  continue  such  restrictions  in  force  as 
to  that  particular  bank  after  the  repeal  by  congress.^^^  A 
by-law  which  provides  that  stock  in  a  banking  corporation 
shall  be  transferable  by  indorsement  in  writing  in  the  pres- 
ence of  the  cashier,  or  two  other  witnesses,  is  valid,  and 

181  McNulta  V.  Corn  Belt  Bank  (1897)  164  111.  427,  45  N.  E.  954. 

182  Northrop  v.  Newton  &  B.  T.  Co.  (1821)  3  Conn.  544;  Northrop 
V.  Curtis  (1824)  5  Conn.  251;  Oxford  Turnpike  Co.  v.  Bunnel  (1827)  6 
Conn.  552. 

183  Bank  v.  Lanier  (1870)  11  WalL  (U.  S.)  376. 

(67) 


§  61  BY-LAWS.  [Ch.  3 

under  such  by-law  it  is  necessary  that  the  witnesses  should 
not  only  be  present,  but  should  attest  the  indorsement  by 
their  signatures.^**  A  by-law  of  an  insurance  company 
providing  that  shares  given  in  exchange  for  stockholders' 
notes  and  mortgages  should  not  be  transferred  unless  such 
notes  were  paid  before  transfer  has  been  held  to  be  an  un- 
reasonable discrimination  against  one  class  of  stockhold- 
ers.^*^ 

Creation  of  lien  on  stock. 

§  61.  By-laws  often  attempt  to  create  a  lien  upon  the 
stock  in  favor  of  the  company  for  any  debts  due  the  com- 
pany from  its  stockholders.  This  usually  takes  the  form 
of  a  by-law  forbidding  the  transfer  of  stock  when  the  per- 
son wishing  to  make  the  transfer  is  indebted  to  the  corpo- 
ration. Probably  no  question  in  regard  to  corporate  by- 
laws has  been  more  discussed  by  the  courts  than  the  ques- 
tion of  the  legality  of  such  a  by-law  as  this ;  but  its  validity 
has  been  settled  by  a  multitude  of  cases.  The  leading 
case  on  this  subject  is  Child  v.  Hudson's  Bay  Co.,  decided 
in  1723.  In  that  case  a  by-law  provided  that,  if  any  mem- 
ber should  be  indebted  to  the  company,  his  stock  should 
first  be  liable  for  the  debt  due  the  company,  and  that  the 
company  might  seize  and  retain  the  stock  for  the  debt. 
Lord  Macclesfield,  in  deciding  the  case,  said:  "This  is  a 
good  by-law,  for  the  legal  interest  of  all  the  stock  is  in  the 
company,  who  are  trustees  for  the  several  members,  and 
may  order  that  the  dividends     »     *     *     shall  be  under 

184  Dane  v.  Young  (1872)  61  Me.  160. 

185  Andes  Ins.  Co.  v.  Waters  (1876)  1  Wkly.  Law  Bui.  (Ohio)   172. 
(68) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  62 

particular  restrictions  or  terms.'"®'  This  case  has  been 
cited  and  relied  on  as  authority  ever  since,  as  sustaining 
the  doctrine  that  a  corporation  may  by  its  by-laws  forbid 
a  transfer  of  the  stock  until  the  person  making  the  trans- 
fer has  paid  up  his  indebtedness  to  the  company.^®^ 

Same — Operation  of  by-law. 

§  62.  Such  a  by-law  applies  whether  the  debt  of  the 
stockholder  is  due  or  not.^*®  A  note  of  the  stockholder  to 
the  corporation  comes  within  the  purview  of  such  a  by- 
law.^*®    Such  a  by-law  is  not  only  valid  as  against  the 

188  Child  V.  Hudson's  Bay  Co.  (1723)  2  P.  Wms.  207. 

18T  Morgan  v.  Bank  of  North  America  (1822)  8  Serg.  &  R.  (Pa.)  88; 
Wain's  Assignees  v.  Bank  of  North  America  (1822)  8  Serg.  &  R.  (Pa.) 
88:  Tete  v.  Farmers'  &  Mechanics'  Bank  (1869)  4  Brewst.  (Pa.)  308; 
McDowell  V.  Bank  of  Wilmington  (1832)  1  Harr.  (Del.)  27;  Brent  v. 
Bank  of  Washington  (1836)  10  Pet.  (U.  S.)  614;  Cunningham  v.  Ala- 
bama Life  Ins.  &  T.  Co.  (1843)  4  Ala.  652;  St.  Louis  Perpetual  Ins. 
Co.  V.  Goodfellow  (1845)  9  Mo.  149;  Tuttle  v.  Walton  (1846)  1  Ga. 
43;  Geyer  v.  Western  Ins.  Co.  (1867)  3  Pittsb.  R.  (Pa.)  41;  Lockwood 
V.  Mechanics'  Nat.  Bank  (1869)  9  R.  I.  308;  Mechanics'  Bank  v. 
Merchants'  Bank  (1870)  45  Mo.  513;  Pendergast  v.  Bank  of  Stockton 
(1871)  2  Sawy.  108,  Fed.  Cas.  No.  10,918;  Young  v.  Vough  (1873)  23 
N.  J.  Eq.  325;  Spurlock  v.  Pacific  Railroad  (1875)  61  Mo.  326;  In  re 
Bachman  (1875)  2  Cent.  Law  J.  119,  12  Nat.  Bank.  Reg.  223;  Bank  of 
Holly  Springs  v.  Pinson  (1880)  58  Miss.  435;  New  London  &  Brazilian 
Bank  t.  Brocklebank  (1881)  L.  R.  21  Ch.  Div.  302;  Stafford  v.  Produce 
Exchange  Banking  Co.  (1898)  16  Ohio  Cir.  Ct.  R.  50,  8  Ohio  Dec.  483; 
Reading  Fire  Ins.  &  T.  Co.  v.  Reading  Iron  Works  (1890)  137  Pa.  St. 
282.  21  Atl.  170. 

i>*«  St.  Louis  Perpetual  Ins.  Co.  v.  Goodfellow  (1845)  9  Mo.  149;  in 
re  Bachman  (1875)  2  Cent.  Law  J.  119,  12  Nat.  Bank.  Reg.  223;  Knight 
V.  Old  Nat.  Bank  (1871)  3  Cliff.  429,  Fed.  Cas.  No.  7,885. 

189  Cunningham  v.  Alabama  Life  Ins.  &  T.  Co.  (1843)  4  Ala.  652. 

(69) 


§  63  BY-LAWS.  [Ch     3 

stockholder,  but  also  aj^ainst  purchasers  of  stock  at  execu- 
tion sale,  where  such  purchasers  have  notice  of  the  by- 
law.^**^  It  has  been  held,  however,  that  such  a  by-law 
would  not  affect  the  rights  of  an  innocent  purchaser  for 
value  without  notice  of  the  by-law.^  ^^  Nor  would  such  a 
by-law  affect  a  transfer  of  stock  made  two  days  before  the 
by-law  was  passed,  though  the  transfer  is  not  entered  on 
the  books  of  the  company  till  after  the  by-law  is  passed.^  "•'^ 
A  by-law  providing  that  no  transfer  of  stock  shall  be  al- 
lowed so  long  as  the  holder  is  in  arrears  to  the  corporation, 
or  is  in  any  form  indebted  to  it,  does  not  justify  the  cor- 
poration in  refusing  to  allow  the  transfer  on  the  ground 
that  the  stock  has  not  been  fully  paid  up,  where  all  the 
calls  on  such  stock  have  been  fully  paid,  since  the  stock- 
holder's liability  for  the  unpaid  portion  of  his  stock  does 
not  constitute  a  debt,  within  the  meaning  of  such  by- 
law.^»3 

Same — Scope  of  lien. 

§  63.  Such  a  by-law  creates  a  lien  as  against  the  stock- 
holder and  his  assignee  for  the  benefit  of  creditors,  wheth- 
er the  stock  stands  in  his  name,  or  has  merely  been  assign- 

i90Tuttle  V.  Walton  (1846)  1  Ga.  43;  Mechanics'  Bank  v.  Merchants' 
Bank  (1870)  45  Mo.  513. 

191  Bank  of  Holly  Springs  v.  Pinson  (1880)  58  Miss.  435;  Anglo- 
Californian  Bank  v.  Grangers'  Bank  (1883)  63  Cal.  359;  Lee  v.  Citi- 
zens' Nat.  Bank  (1872)  2  Gin.  (Ohio)  298. 

i»2  People  V.  Crockett  (1858)  9  Cal.  112. 

loaKahn  v.  Bank  of  St.  Joseph  (1879)  70  Mo.  262.  But  see  In  re 
Bachman  (1875)  2  Cent.  Law  J.  119,  12  Nat.  Bank.  Reg.  223. 

(70) 


Qh.]  3  SUBJECT-MATTER  OF  BY-LAWS.  {^   (^A 

ed  to  him  by  the  former  owner.^^*  This  lien  is  good  not 
only  between  the  parties,  but  also  as  to  an  attaching  cred- 
itor of  the  stockholder.^ ^^  The  fact  that  stock  is  pledged 
to*  the  corporation  to  secure  the  payment  of  a  particular 
debt  of  the  stockholder  does  not  release  such  stock  from 
the  general  lien  created  by  the  by-laws  to  secure  all  the 
debts  of  such  stockholder  due  the  corporation. ^^^  And  a 
by-law  of  a  bank  providing  that  stockholders  desiring  to 
sell  shall  give  the  bank  an  option  to  purchase  for  ten  days, 
after  which  they  may  sell  at  pleasure,  does  not  waive  the 
rights  of  the  bank  under  a  statute  to  a  lien  on  the  stock 
to  secure  debts  due  from  stockholders.^®^ 

Same — Validity  of  by-law. 

§  64.  It  is  held  in  New  York**^  and  Louisiana^ ^^  that 
by-laws  of  this  character  are  invalid.  The  reasons  given 
for  the  New  York  decisions  are  that  the  by-law  is  not  rea- 
sonable, and  that  it  creates  a  secret  lien.  The  first  reason 
is  opposed  to  the  weight  of  authority;  the  second  reason 
would  not  apply  to  persons  who  had  actual  or  construc- 
tive notice  of  the  by-law.     The  reason  given  for  the  Louisi- 

i94Wetherell  v.  Thirty-First  St.  B.  &  L.  Ass'n  (1894)  153  111.  361,  39 
N.  E.  143. 

105  Farmers'  &  Traders'  Bank  v.  Haney  (1893)  87  Iowa,  101,  54  N. 
W.  61. 

196  In  re  Peebles  (1875)  2  Hughes,  394,  Fed.  Cas.  No.  10,902. 

i»7  Citizens'  State  Bank  v.  Kalamazoo  County  Bank  (1896)  111  Mich, 
313,  69  N.  W.  663. 

i98Driscoll  V.  West  Bradley  &  C.  M.  Co.  (1874)  .^9  N.  Y.  101;  Bank 
of  Attica  V.  Manufacturers'  &  Traders'  Bank  (1859)   20  N.  Y.  501. 

199  Bryon  v.  Carter  (1870)  22  La.  Ann.  98;  New  Orleans  Nat.  Bank- 
ing Ass'n  V.  Wiltz  (1881)  4  Woods  (U.  S.)  43,  10  Fed.  330. 

(71) 


§   65  BY-LAWS.  [Ch.  3 

ana  decisions  is  that  such  a  by-law  would  operate  to  with- 
draw property  from  commerce.  It  would  certainly  have 
the  effect  of  impeding  somewhat  the  sale  of  corporate 
stock,  but  why  such  impediment  would  not  be  legal  as 
against  those  who,  by  becoming  stockholders,  submit  to  the 
regulations  of  the  company,  it  is  difficult  to  understand. 
The  better  reason,  as  well  as  the  weight  of  authority,  seems 
to  be  in  favor  of  the  validity  of  such  a  by-law.  And  where 
such  a  by-law  is  printed  in  full  on  the  back  of  the  stock 
certificates,  or  is  so  referred  to  in  each  certificate  that  no 
purchaser  can  read  it  without  being  made  aware  of  the 
by-law,  it  would  seem  that  all  persons  would  have  adequate 
notice  of  the  by-law,  and  of  the  rights  existing  under  it. 

Same — ^Banking  corporations. 

§  65.  By-laws  of  this  character  are  usually  made  by 
banking  corporations,  since  they  are  most  likely  to  be  the 
creditors  of  their  stockholders;  and  in  one  Pennsylvania 
case  it  was  intimated  that  such  a  by-law  would  not  be  good 
wlien  made  by  any  corporation  other  than  a  bank.^*®  It  is 
difficult  to  see  any  reason  for  this  distinction,  and  the  lead- 
ing case  of  Child  v.  Hudson's  Bay  Co.,  supra,  involved  a 
corporation  that  was  not  a  bank.  There  is  one  cla^  of 
banks,  however,  that  cannot  pass  such  a  by-law,  and  that 
is  banking  associations  organized  under  the  national  bank- 
ing act.  The  reason  for  this  restriction  is  that  national 
banks  are  forbidden  by  act  of  congress  to  make  loans  on 
the  security  of  their  own  stock,  and  therefore  a  by-law  of 

aoo  steamship  Dock  Co.  v.  Heron  (1866)  52  Pa.  St.  280. 
(72) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  66 

this  nature,  which  would  be  an  attempt  to  do  indirectly 
what  the  bank  is  forbidden  to  do  directly,  has  been  repeat- 
edly held  in  the  case  of  national  banks  to  be  void.^^^  Some 
of  the  earlier  decisions  held  that  even  national  banks  might 
adopt  such  a  by-law,-°^  but  the  law  is  now  settled  to  the 
contrary. 

Retiring  or  forfeiting  stock. 

§  66.  Apart  from  the  right  of  regulating  the  transfer  of 
stock,  and  the  power  to  create  a  lien  on  it  for  debts  due  to 
the  corporation,  the  power  to  pass  by-laws  affecting  the 
stock  is  very  limited.  Thus,  under  a  general  power  to  pass 
by-laws,  for  "the  general  regulation  of  the  business  of  the 
corporation,"  and  such  as  are  "needful  in  carrying  out  and 
effecting"  its  objects,  the  stockholders  have  no  authority 
by  by-law  to  make  an  enforced  retirement  of  part  of  the 
capital  stock  against  the  objection  of  even  a  single  stock- 
holder.2^3  And  a  by-law  giving  the  stockholders  the  privi- 
lege of  forfeiting  their  stock,  upon  payment  of  thirty  per 
cent  of  its  face  value,  is  void  as  against  creditors,  where 
such  payment  would  not  create  a  fund  sufficient  to  pay 

2oiBul]ard  v.  Bank  (1873)  18  Wall.  (U.  S.)  589;  Bank  v.  Lanier 
(1870)  11  Wall.  (U.  S.)  369;  Delaware,  L.  &  W.  R.  Co.  v.  Oxford 
Iron  Co.  (1884)  38  N.  J.  Eq.  340;  Rosenback  v.  Salt  Springs  Nat. 
Bank  (1868)  53  Barb.  (N.  Y.)  495;  Conklin  v.  Second  Nat.  Bank  (1871) 
45  N.  Y.  655,  53  Barb.  512;  Evansville  Nat.  Bank  v.  Metropolitan  Nat. 
Bank  (1871)  2  Biss.  527,  Fed.  Cas.  No.  4,573;  Second  Nat.  Bank  v.  Na- 
tional State  Bank  (1874)  10  Bush  (Ky.)  367. 

202  Lockwood  V.  Mechanics'  Nat.  Bank  (1869)  9  R.  L  308;  Young 
V.  Vough  (1873)  23  N.  J.  Eq.  325;  In  re  Dunkerson  (1868)  4  Biss. 
227,  Fed.  Cas.  No.  4,156. 

208  Bergman  v.  St.  Paul  Mut.  Bldg.  Ass'n   (1882)   29  Minn.  278. 

(73) 


§  68  BY-LAWS.  [Ch.3 

the  debts  of  the  corporatioii,^"^  though,  as  between  the 
corporation  and  the  stockholders,  such  a  by-law  would 
probably  be  valid.^^** 

Issuing  preferred  stook. 

§  67.  After  common  stock  has  been  issued  by  a  corpo- 
ration, it  has  no  right,  except  by  unanimous  consent  of  the 
stockholders,  to  provide  by  by-law  for  the  issuance  of  pre- 
ferred stock.^"^  It  has  been  held  in  Massachusetts,  in  re- 
gard to  a  church  corporation,  that  a  by-law  making  the 
price  of  each  share  twenty- five  dollars,  and  providing  that, 
on  payment  of  three  dollars  additional,  any  shareholder 
might  have  his  share  made  redeemable  out  of  the  corporate 
funds  whenever  he  should  remove  from  the  town,  was 
valid.^"'^  Where  the  charter  of  a  mutual  benefit  society 
specifies  the  amount  that  may  be  paid  each  member  as  a 
mortuary  benefit,  the  society  cannot  by  by-law  provide  for 
a  larger  benefit.^"^ 

Affecting  rights  of  members. 

§  68.  The  power  of  a  corporation  to  pass  by-laws  af- 
fecting the  rights  of  its  members  has  frequently  been  the 
subject  of  litigation,  and  the  general  tendency  of  the  de- 
cisions is  to  abridge  rather  than  to  extend  this  power. 

204Slee  V.  Bloom  (1822)  19  Johns.  (N.  Y.)  477. 

205  Cooper  v.  Frederick  (1846)  9  Ala.  739. 

206  Kent  V.  Quicksilver  Mining  Co.  (1879)   78  N.  Y.  179. 

207  Davis  V.  Proprietors  of  Meeting  House  (1844)  8  Mete.  (Maaa.) 
321. 

208  Nelligan  v.  New  York  Typographical  Union  No.  6  (1886)  2  City  Ct. 
Rep.   (N.  Y.)   261. 

(74) 


Oh.  3]  SUBJECT-MATTER  OF  BY-LAWS.  g  68 

Thus,  where  the  articles  of  incorporation  prescribe  the  con- 
ditions of  membership,  by-laws  cannot  impose  additional 
conditions,^"^  though,  where  there  is  nothing  in  the  charter 
to  prevent  it,  an  incorporated  secret  society  may  provide  by 
by-law  that  an  applicant  for  membership,  in  addition  to 
paying  his  fee  and  being  elected  a  member,  must  be  initiat- 
ed into  the  society  before  he  acquires  any  rights  as  a  mem- 
ber.^^*  Where  a  society  is  incorporated  merely  for  liter- 
ary or  benevolent  purposes,  and  is  possessed  of  property, 
a  by-law  requiring  all  members  to  receive  the  sacraments 
of  the  Roman  Catholic  Church  twice  a  year,^^^  or  to  be 
members  of  that  church,^^^  under  penalty  of  expulsion,  is 
void,  as  contrary  to  the  constitutional  right  of  religious 
freedom.  But  where  a  society  is  incorporated  as  a  re- 
ligious organization,  it  may  provide  by  by-law  that  any 
member  who  shall  either  cease  to  worship  regularly  with 
the  society,  or  shall  fail  to  contribute  regularly  to  the  sup- 
port of  its  public  worship  for  one  year,  shall  lose  his  mem- 
bership.^ ^^  A  by-law  of  a  mutual  benefit  insurance  com- 
pany providing  that,  if  any  member  shall,  after  admission, 
engage  in  any  occupation  which  bars  applicants  for  ad- 
mission, he  shall  stand  suspended,  is  valid.^^* 

209  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc.  No.  1  (1879) 
41  Mich.  67,  1  N.  W.  931,  6  Am.  Corp.  Cas.  626. 

2ioMatkin  v.  Supreme  Lodge,  K.  of  H.  (1891)  82  Tex.  301,  18  S.  W. 
306. 

211  People  V.  St.  Franclscus  Ben.  Soc.  (1862)  24  How.  Pr.  (N.  Y.)  216. 

212  People  V.  Young  Men's  Father  Matthew  T.  A.  B.  Soc.  No.  1  (1879) 
41  Mich.  67,  1  N.  W.  931,  6  Am.  Corp.  Cas.  626. 

213  Gray  v.  Christian  Soc.  (1884)  137  Mass.  329,  50  Am.  Rep.  310; 
Commonwealth  v.  Cain  (1820)  5  Serg.  &  R.  (Pa.)   509. 

214  Schmidt  v.  Supreme  Tent,  K.  of  M.  (1897)  97  Wis.  532,  73  N. 
W.  22. 

(75) 


§  70  BY-LAWS.  [Ch.  3 

Same — Suspension  of  members. 

§  69.  Where  neither  the  charter  of  a  corporation  nor 
any  general  statute  imposes  on  the  individual  members  a 
liability  for  the  corporate  debts,  such  liability  cannot  be 
imposed  by  by-law,  since  such  a  by-law  might  be  the  act  of 
a  mere  majority,  and  its  adoption,  even  by  unanimous 
vote,  would  not  be  the  act  of  the  individual  members,  and 
would  not,  therefore,  bind  them  as  a  contract.^^'  Where 
the  charter  of  a  mutual  insurance  company  provides  that 
the  neglect  of  a  member  to  pay  his  assessment  for  thirty 
days  after  actual  notice  shall  enable  the  corporation  to 
declare  his  entire  deposit  note  due,  a  by-law  which  pro- 
vides that  the  notice  shall  be  given  by  publication  and 
mailing  is  invalid,  as  contrary  to  the  charter.^^^  And 
where  the  charter  of  such  a  society  recognizes  the  right  of 
any  member  to  designate  his  beneficiary  by  his  will,  the 
society  cannot  by  by-law  abridge  this  right.^^"^  Nor  can 
the  society  provide  by  by-law  that  only  a  part  instead  of 
all  the  policy  holders  shall  be  assessed  to  pay  a  particular 
loss,  contrary  to  the  contract  contained  in  its  policies  of 
insurance.^^® 

Same — Limiting  right  to  benefit  and  restricting  suits. 

§  70.     A  mutual  insurance  company  may  provide  by 

218  Trustees  v.  Flint  (1847)  13  Mete.  (Mass.)   539;  Reid  v.  E^tonto* 
Mfg.  Co.   (1869)   40  Ga.  101. 

216  Great  Falls  Mut.  Fire  Ins.  Co.  v.  Harvey  (1864)   45  N.  H.  299. 

2i7Raub  V.  Masonic  Mut.  Relief  Ass'n  (1884)  3  Mackey  (D.  C.)  68. 

218  Stewart  t.  Lee  Mut.  Fire  Inb.  Ass'n   (1886)    64  Miss.  499,  1  So. 
743. 
(76) 


Ch.  3]  SUBJECT-MATTER  OP  BY-LAWS.  §  71 

by-law  that  actions  against  the  company  for  losses  shall 
be  brought  within  a  limited  time  after  the  directors  de- 
termine the  extent  of  the  loss.^^*  But  it  cannot  by  by- 
law restrict  its  members  to  a  particular  county  in  which 
to  bring  such  an  action.^^''  The  by-law  of  a  mutual  bene- 
fit society  which  provides  that  no  benefits  shall  be  paid 
when  a  member's  death  is  caused  by  intemperance  or  de- 
bauchery is  reasonable.^^^  So,  also,  is  a  by-law  forfeit- 
ing benefits  for  suicide.^^^  And  so  is  a  by-law  making  the 
production  of  a  doctor's  certificate  a  condition  precedent 
to  the  receipt  of  sick  benefits.^^^  A  by-law  of  a  charitable 
asylum  forbidding  the  inmates  to  leave  the  premises  with- 
out permission,  or  to  indulge  in  contention  or  boisterous 
or  disorderly  conversation  at  table  upon  pain  of  expul- 
sion, is  reasonable  and  valid.^^* 

Same — Expulsion  of  subordinate  lodge. 

§  71.  Where  the  charter  of  an  incorporated  society, 
composed  of  various  subordinate  branches  or  assemblies, 
provides  that  membership  shall  cease  by  death,  voluntary 
withdrawal,  or  expulsion,  a  by-law  which  declares  that 

2i»Amesbury  v.  Bowditch  Mut.  Fire  Ins.  Co.  (1856)  6  Gray  (Mass.) 
603. 

22oNute  V.  Hamilton  Mut.  Ins.  Co.  (1856)  6  Gray  (Mass.)  174; 
Amesbury  v.  Bowditch  Mut.  Fire  Ins.  Co.   (1856)    6  Gray  (Mass.)   603. 

221  St.  Mary's  Ben.  Soc.  v.  Burford  (1872)  70  Pa.  St.  321.  See  post. 
c.  5. 

222  Theobald  v.  Supreme  Lodge,  K.  of  P.  (1894)  59  Mo.  App,  87; 
Supreme  Lodge,  K.  of  P.,  v.  Clarke  (1899)  88  111.  App.  600.  See  post, 
c.  5. 

223  Harrington  v.  Workingmens'  Ben.  Ass'n  (1883)  70  Ga.  340. 

224  People  V.  Sailors'  Snug  Harbor  (1868)  54  Barb.  (N.  Y.)  532. 

(77) 


§   71  BY-LAWS.  [Ch.    3 

the  removal  of  a  local  assembly  from  the  jurisdiction  of  a 
district  assembly  shall  be  equivalent  to  voluntary  with- 
drawal, is  void  as  repugnant  to  the  charter.^^^  In  a 
case  in  Pennsylvania  it  appeared  that  a  savings  bank  had 
been  charteivd  as  a  charitable  institution.  It  had  both 
members  and  stockholders.  The  stockholders  elected  the 
dii-ectors,  but  the  members  had  the  right  to  investigate 
the  management  of  the  bank  periodically.  The  directors 
had  power  to  provide  for  the  admission  of  members,  and 
they  passed  a  by-law  declaring  that  every  stockholder 
should  be  a  member.  The  court  held  that  the  by-law  was 
invalid,  being  contrary  to  the  spirit  of  the  charter,  which 
gave  to  the  members  alone  the  direction  and  management 
of  the  corporation.^-''  Another  case  in  the  same  state  in- 
volved the  powers  of  an  incorporated  fire  company,  whose 
charter  provided  that  the  corporation  should  consist  of 
not  more  than  one  hundred  active  members.  The  court 
held  that  a  by-law  authorizing  the  election  of  "contribut- 
ing members"  who  were  not  active  members  was  illegal, 
since  the  power  of  electing  members  conferred  by  the  char- 
ter could  not  be  extended  by  the  by-laws.^^^  it  is  proba- 
ble that  by-laws  may  limit  or  even  take  away  altogether 
the  members'  common-law  right  to  inspect  the  corporate 
records.^^^ 

225  New  York  Protective  Ass'n  v.  McGrath  (1889)  5  N.  Y.  Supp.  8. 

226  Commonwealth  v.  Gill  (1837)  3  Whart.  (Pa.)  246. 

927  Diligent  Fire  Co.  v.  Commonwealth  (1874)  75  Pa.  St.  291. 
228  Ranger  v.  Champion  C.  P.  Co.   (1892)    51  Fed.   61,  5  Nat.  Corp. 
Rep.  30. 

(78) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §72 

Private  affairs  of  members. 

§  72.  The  power  of  a  corporation  to  control  the  con- 
duct and  define  the  rights  of  its  members  by  means  of  its 
by-laws  is  limited  strictly  to  their  rights  and  conduct  as 
members  of  the  association.  With  the  private  affairs  of 
its  members  the  corporation  has  nothing  to  do,  and  any 
by-law  attempting  to  interfere  with  such  affairs  is  neces- 
sarily ultra  vires  and  void.  Thus,  a  medical  society  in- 
corporated for  the  purpose  of  regulating  the  practice  of 
physic  and  surgery  has  no  right  to  pass  a  by-law  establish- 
ing a  tariff  of  prices  to  be  charged  by  its  members  for 
medical  services  rendered  by  them  to  their  patients.^^^ 
And  a  musical  society  incorporated  for  the  purpose  of 
cultivating  the  art  of  music  and  promoting  good  feeling 
among  the  members  of  the  profession  has  no  right  to  pass 
a  l)y-law  forbidding  its  members  to  play  in  any  orchestra 
or  band  containing  persons  who  are  not  members  of  the 
soeiety.^^"  An  unincorporated  trade  association,  designed 
to  advance  the  general  welfare  of  its  members,  may  pro- 
vide that  a  member  sustaining  injury  by  accident  in  his 

229  People  V.  Medical  Soc.  (1857)  24  Barb.  (N.  Y.)  570.  But  a  con- 
trarj'  holding  has  been  made  in  case  of  a  pilots'  society.  Lee  v.  Louis- 
ville, P.  B.  &  R.  Ass'n  (1867)   65  Ky.  254. 

230  Thomas  v.  Musical  Mut.  Protective  Union  (1888)  17  N.  Y.  St. 
Rep.  51,  49  Hun  (N.  Y.)  171,  2  X.  Y.  Supp.  195.  This  case  was  re- 
versed by  the  court  of  appeals  upon  another  point,  that  court  ex- 
pressly refusing  to  pass  on  the  validity  of  the  by-law  in  question. 
Thomas  v.  Musical  Mut.  Protective  Union  (1890)  121  N.  Y.  45,  24  N. 
E.  24. 

(79) 


§  73  BY-LAWS.  [Ch.  3 


work  shall  not  receive  benefits  unless  he  was  working  on 
the  job  at  t\  ages  prescribed  by  the  organization/ 


231 


Same— Individiial  trade  by  members. 

§  73.  In  a  recent  case  in  Minnesota  it  was  decided  that 
a  corporation  organized  to  buy  and  sell  fuel,  and  to  do 
any  and  all  things  that  might  legally  be  done  to  promote 
the  interests  of  the  corporation  and  its  stockholders,  had 
no  power  to  pass  by-laws  regulating  the  conduct  of  the 
separate  and  individual  business  of  its  members,  and  im- 
posing penalties  upon  them  for  not  carrying  on  such  indi- 
vidual business  according  to  prices  fixed  by  the  directors 
of  the  corporation.2^2  But  where  the  object  of  a  corpora- 
tion, all  of  whose  members  are  engaged  in  a  particular 
trade,  is  the  carrying  on  of  that  trade  in  partnership,  it 
seems  that  a  by-law  prohibiting  any  member  of  the  cor- 
poration from  (';uTying  on  such  trade  on  his  own  account 
is  good.^^^  The  difference  between  this  and  the  Minne- 
sota case,  above  cited,  is  that  here  the  carrying  on  of  the 
members'  business  jointly  was  the  direct  object  of  the 
corporation,  while  in  the  Minnesota  case  the  business 
of  the  corporation  was  entirely  separate  from  that  of  its 
members.  Upon  the  same  principle,  an  association  of 
underwriters,  inc6rx)orated  for  the  express  purpose  of  es- 
tablishing and  maintaining  among  its  members  uniformity 
in  policies  of  insurance,  may  by  by-law  establish  rates  of 

231  Conniff  v.  Jarnour  (1900)  31  Misc.  Rep.  729,  65  N.  Y.  Supp.  317. 

M2Kolff  V.  St.  Paul  Fuel  Exchange  (1892)   48  Minn.  215,  50  N.  W, 
1036. 

2«aRex  V.  Fishermen  of  Taversham  (1798)  8  Term  R.  197 
(80) 


QYi.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  74 

premium  of  insurance,  and  expel  members  who  violate  the 
provisions  of  such  by-law.^^* 

Same — Honesty  in  individual  dealings. 

§  74.  An  incorporated  board  of  trade,  one  of  whose  ob- 
jects is  stated  to  be  the  promotion  of  a  high  standard  of 
commercial  honor  by  securing  among  its  members  a 
prompt  discharge  of  their  pecuniary  obligations,  may  pro- 
vide by  by-law  that  any  member  who  fails  to  comply 
promptly  with  any  business  contract  made  with  another 
member  shall  be  expel led.^^^  And  such  a  corporation  may 
also  impose  the  penalty  of  expulsion  upon  any  member  who 
is  guilty  of  flagrant  breach  of  contract  or  any  gross  miscon- 
duct,^^ or  breach  of  any  contract,  whether  oral  or  writ- 
ten, evai  though  not  made  at  the  corporation's  place  of 
business.^^''^  Although  a  mere  breach  of  contract  on  the 
part  of  a  member  of  a  produce  exchange,  without  any 
moral  delinquency,  is  not  within  a  by-law  authorizing  the 
managers,  after  a  hearing,  to  expel  a  member  for  fraudu- 
lent breach  of  contract,  or  any  proceedings  inconsistent 
with  just  and  equitable  principles  of  trade,  yet  evidence 
that  a  member  failed  to  perform  a  contract  to  deliver  to 
another  member  a  quantity  of  oil  at  a  stipulated  price,  and 
that  the  price  of  oil  had  advanced  between  the  date  of  the 

234  People  V.  Board  of  Fire  Underwriters  (1875)  54  How.  Pr    (N   Y  ) 
240.  •       •        •     •) 

235  People  V.  Chicago  Board  of  Trade  (1867)  45  111.  115. 

236  People  V.  New  York  Commercial  Ass'n   (1864)    18  Abb.  Pr    (N 
Y.)  282. 

»37  Dickenson  v.  Chamber  of  Commerce  (1871)  29  Wis.  45. 

Boisot  By  Laws — 6.  ^       ' 


§  75  BY-LAWS.  [Ch.  3 

contract  and  tlie  date  set  for  performance,  and  that  the 
delinquent  member  endeavored  to  shift  the  blame  by  stat- 
ing that  he  was  acting  as  agent  for  another,  will  support 
expulsion  under  such  a  by-law.^^* 

Same — Requirement  of  arbitration  between  members. 

§  75.  An  organization  of  tobacco  buyers  and  ware- 
housemen, authorized  by  its  articles  to  regulate  members 
in  buying,  selling,  and  warehousing  tobacco,  may  require 
members  to  execute  bonds  to  secure  to  shippers  the  pro- 
ceeds of  their  tobacco.^^^  But  a  merchants'  exchange  has 
no  right  to  pass  a  by-law  which  compels  its  members  to 
submit  their  business  controversies  to  arbitration,  on  pain 
of  suspension  or  expulsion,^^"  Where  the  by-laws  of  such 
a  corporation  provide  for  expulsion  for  improper  conduct, 
without  specifying  what  acts  should  be  considered  to  con- 
stitute improper  conduct,  it  has  been  held  that  a  member 
who  brought  suit  against  the  corporation  to  prevent  it 
from  disposing  of  a  membership  claimed  by  him  was  not 
thereby  guilty  of  improper  conduct,  within  the  meaning 
of  the  by-la ws.^*^  A  by-law  of  a  commercial  exchange 
providing  that  a  member  who  is  unable  to  meet  his  con- 
tracts with  other  members  shall  notify  the  president,  who 
shall  then  post  a  notice,  and  that,  if  a  member  fails  to 

238  People  V.  New  York  Produce  Exchange  (1896)   149  N.  Y.  401,  44 
N.  E.  84. 

239  Warren  v.  Louisville  Leaf  Tobacco  Exchange  (Ky.;   1900)   55  S. 
W.  912. 

240  State  V.  Merchants'  Exchange  (1876)  2  Mo.  App.  96. 

«4i  People  V.  New  York  Cotton  Exchange  (1876)  8  Hun  (N.  Y.)  216. 
(82) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  76 

notify  the  president,  then,  upon  satisfactory  proof,  the 
latter  shall  appoint  a  committee  to  investigate  the  case, 
and  if  they  are  satisfied  of  the  failure,  then  they  shall 
instruct  the  president  to  post  the  notice,  is  a  valid  by- 
law.^*^  It  seems  that  a  mutual  benefit  society  may  pro- 
vide by  by-law  that  any  member  of  the  society  who  joins 
any  standing  army  shall  forfeit  his  membership,  since  be- 
coming a  soldier  tends  to  increase  materially  the  hazard  of 
life  insurance,  but  such  a  by-law  is  not  broad  enough  to 
include  the  case  of  one  who  merely  enlists  in  a  volunteer 
regiment  in  time  of  war.^^^ 

Restraint  of  trade. 

§  76.  By  the  common  law,  contracts  in  restraint  of 
trade  were  regarded  with  disfavor,  and  the  same  rule  ap- 
plies as  well  to  by-laws.  Thus,  it  was  held  in  an  early 
English  case  that  a  by-law  made  by  the  Gunmakers'  So- 
ciety, to  the  effect  that  no  member  should  sell  a  gun 
barrel  to  any  person  of  the  trade  not  a  member  of  the 
society,  either  in  London  or  within  four  miles  thereof,  was 
bad,  as  being  in  restraint  of  trade.^*^  And  the  same  ob- 
jection applies  to  a  by-law  which  in  effect  forbids  the 
members  from  working  at  their  trade  or  occupation  at 
such  prices  or  under  such  conditions  as  they  choose  to  ac- 
cept.^^^     Thus,    a   by-law   of   an    association    of   master 

242  Sexton  V.  Commercial  Exchange  (1891)  10  Pa.  Co.  Ct.  R.  607. 
24S  Franklin  Beneficial  Ass'n  v.  Commonwealth  (1849)  10  Pa.  St.  357. 
24*  Gunmakers'  Soc.  v.  Fell   (1742)   Willes,  384. 

245  People  V.  New  York  Ben.  Soc.  (1875)  3  Hun  (N.  Y.)  361;  Thomas 
V.  Musical  Mut.  Protective  Union  (1888)  49  Hun  (N.  Y.)  171,  17  N.  Y. 

(83) 


§  77  BY-LAWS.  [Ch.  3 

plumbers,  providing  that  each  member  of  the  association 
be  required  to  report  each  week  what  work  he  had  done, 
and,  if  it  developed  that  such  work  had  been  done  in  com- 
petition with  any  other  member,  the  member  doing  the 
work  should  pay  into  the  treasury  of  the  association  a 
fixed  sum,  according  to  a  schedule  agreed  upon  and  made 
part  of  the  by-law,  is  void.^"*^  A  benevolent  society  com- 
posed wholly  of  captains  and  owners  of  river  steamboats 
has  no  right  to  adopt  a  by-law  declaring  that  no  member 
shall  carry  freight  for  less  than  certain  rates.^^'^  And  a 
board  of  underwriters,  formed  for  the  purpose  of  secur- 
ing unanimity  in  the  rates  of  premium,  harmony  in  the 
conditions  of  insurance,  and  concurrence  in  the  policies, 
has  no  right  to  adopt  a  by-law  forbidding  a  member  from 
employing  more  than  one  solicitor,  regulating  his  salary 
and  term  of  service,  and  prohibiting  the  employment  of 
any  solicitor  who  has  left  the  service  of  another  member 
of  the  board.^*® 

Same. 

§  77.     It  was  held  as  far  back  as  Lord  Coke's  time  that 

St.  Rep.  51,  2  N.  Y.  Supp.  195;  Parker  v.  Toronto  Musical  Protective 
Ass'n  (1900)  32  Ont.  305.  Contra,  Master  Stevedores'  Ass'n  v.  Walsh 
(1867)  2  Daly  (N.  Y.)  1;  Lee  v.  Louisville,  P.  B.  &  R.  Ass'n  (1867) 
65  Ky.  254. 

246  Bailey  v.  Master  Plumbers  (1899)  103  Tenn.  99,  52  S.  W  853 
And  see  Milwaukee  M.  &  B.  Ass'n  v.  Niezerowski  (1897)  95  wis  129 
70  N.  W.  166. 

247  Sayre  v.  Louisville  Union  Benev.  Ass'n  (18G3)  1  Duv.  (Ky  )  143 
85  Am.  Dec.  613. 

248  Huston  v.  Rentlinger  (1891)  91  Ky.  333,  15  S.  W.  867;  People  v. 
Chicago  Live  Stock  Exchange  (1897)  170  111.  556,  48  N   E   1062 

(84) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  78 

no  organization  of  dealers  had  any  right  to  pass  any  by-law 
to  prohibit  any  one  from  exercising  his  trade  until  he 
had  presented  himself  before  them  to  prove  his  apprentice- 
ship, or  until  they  allowed  him  to  be  a  workman.^^®  And 
a  by-law  restraining  the  number  of  apprentices  to  be  taken 
by  members  of  the  company  is  bad.^^'*  Whether  a  press 
association  may  prohibit  members  from  furnishing  news 
to  any  one  who  shall  have  been  declared  by  the  board  of 
directors  or  stockholders  to  be  antagonistic  to  the  associa- 
tion, or  to  any  one  else  engaged  in  collecting  news,  unless 
with  the  written  consent  of  the  directors,  is  a  point  on 
which  the  decisions  are  conflicting.^^! 

Same — Competition  between  exchange  and  its  members. 

§  78.  It  has  been  held,  how^ever,  that  an  incorporated 
board  of  trade  has  power  to  pass  a  by-law  prohibiting  its 
members  from  gathering  in  any  public  place  in  the  vicinity 
of  its  exchange  room,  and  forming  a  market  for  the  pur- 
pose of  trading  for  the  future  delivery  of  grain  and  pro- 
visions before  or  after  the  times  when  the  exchange  room 
is  open  for  general  trading  f"^  and  an  article  of  a  funeral 
directors'  association,  providing  that  members  are  not  to 

249  Case  of  Tailors,  etc.,  of  Ipswich   (1615)   11  Coke,  53.     gee 
Clark  V.  Le  Cren  (1829)  9  Barn.  &  C.  52. 

250  Rex  V.  Coopers  Company  (1798)   7  Term  R.  543. 

261  In  Illinois,  such  a  regulation  has  been  held  void.     Inter-Op 
Pub.  Co.  V.  Associated  Press  (1900)  184  111.  438,  56  N.  E.  822      B   f^" 
is  good  in  Missouri.     State  v.  Associated  Press  .(1900)  159  Mo    41o    6o 
S.  W.  91.     And  see  Mathews  v.  Associated  Press  (1891)  15  N   Y   S 
887.  ■     ■      ^^'^' 

252  State  V.  Milwaukee  Chamber  of  Commerce  (1879)  47  wis   683 

(85) 


§  80  BY-LAWS.  [Ch.  3 

render  services  for  or  furnish  burial  materials  to  any  per- 
son who  fails  to  discharge  an  existing  indebtedness  to  any 
member  of  the  association,  is  not  unlawful.^^^  It  has 
been  held  in  California  that  a  corporation  organized  for  the 
purpose  of  supplying  water  for  the  use  of  the  owners  and 
occupants  of  land  within  a  particular  district  might  adopt 
by-laws  limiting  the  right  to  use  the  water  to  stockholders 
of  the  company  who  were  landowners.^^* 

Penalties. 

§  79.  By-laws  frequently  create  penalties  for  offenses 
against  the  corporation,  or  violations  of  its  charter  or  by- 
laws. These  penalties  are  of  two  sorts — First,  a  pecuniary 
mulct  or  fine;  second,  a  deprivation  of  participation  in 
the  privileges  of  the  corporation,  which  may  be  either  per- 
manent, as  in  case  of  expulsion  or  disfranchisement,  or 
temporary,  as  in  case  of  suspension.  From  what  has  been 
said  in  a  previous  chapter  regarding  the  scope  of  by- 
laws,255  it  is  evident  that  these  penalties  can  only  be  in- 
flicted upon  members  or  officers  of  the  corporation. 
Strangers  are  necessarily  exempt.  The  manner  of  en- 
forcing these  penalties  will  be  treated  of  in  a  subsequent 
chapter.258 

Same — Reasonal)leness. 

§  80.     By-laws  imposing  penalties  must,  of  course,  be 

253  Brewster  v.  Miller  (1897)  101  Ky.  368,  41  S.  W.  301. 
254McFadden  v.  Los  Angeles  County  (1888)   74  Cal.  571. 
28S  See  ante,  c.  1,  §  7. 
256  See  post,  c.  C. 
(86) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  80 

reasonable.^^'^  Where  a  loan  association  is  empowered  bv 
charter  to  impose  fines  on  members  for  failure  to  pay  as- 
sessments, but  the  charter  is  silent  as  to  the  extent  of  the 
power,  the  validity  of  the  by-laws  is  to  be  tested  by  their 
reasonableness.^^®  Thus  a  by-law  empowering  directors 
to  fine  members,  without  prescribing  any  limit  in  extent 
or  amount,  has  been  declared  invalid.^^^  For  a  single 
offense,  a  double  penalty  cannot  be  exacted.^*'*^  Thus,  a 
single  fine  may  be  imposed  for  failure  to  pay  certain  dues, 
but  an  additional  fine  cannot  be  imposed  for  each  month 
that  the  member  remains  in  default.^^^  And  even  where 
the  by-law  provides  that,  "if  any  person  shall  neglect, 
omit,  or  refuse  to  pay  his  or  her  weekly  dues  at  the  time 
required  hereby,  he  or  she  shall  be  fined  ten  cents  weekly 
for  each  and  every  dollar  remaining  unpaid,"  only  one 
fine  can  be  imposed  for  nonpayment  of  the  weekly  install- 
ment as  it  falls  due.^^^  And  where  an  offense  is  made 
punishable  either  by  fine  or  expulsion,  a  member  who 
has  been  fined  and  has  paid  his  fine  cannot  afterwards  be  ex- 
pelled for  the  same  offense.^®^ 

257  Graham  v.  House  B.  &  L.  Ass'n  (Tenn.  Ch.  App.;  1898)  52  S  W 
1011. 

258Vierling  v.  Mechanics'  &  Traders'  S.,  L.  &  B.  Ass'n  (1899)  179 
111.  524,  53  N.  E.  979. 

259Albers  v.  Merchants'  Exchange  (1890)   39  Mo.  App.  583. 

260McGannon  v.  Central  Bldg.  Ass'n  (1882)  19  W.  Va.  738;  Forest 
City  U.  L.  &  B.  Ass'n  v.  Gallagher  (1874)  25  Ohio  St.  208. 

261  Lynn  v.  Freemansburg  B.  &  L.  Ass'n  (1887)  117  Pa.  St.  1;  Forest 
City  U.  L.  &  B.  Ass'n  v.  Gallagher  (1874)  25  Ohio  St.  208;  Hagerman 
V.  Ohio  B.  &  S.  Ass'n  (1874)  25  Ohio  St.  186.  See,  also,  Dupiiy  v. 
Eastern  B.  &  L.  Ass'n  (1896)  93  Va.  460,  25  S.  E.  537. 

262  Monumental  Permanent  B.  &  L.  Soc.  v.  Lewin  (1873)  38  Md.  445. 

263  People  V.  New  York  Bei^ev.  Soc.  (1875)  3  Hun  (N.  Y.)  364.  But 
Bee  Simek  v.  Lodge  No.  86  (1898)  118  Mich.  81,  76  N.  W.  124. 

(87) 


§  81  BY-LAWS.  [Ch.  3 

Same — ^Building  and  loan  societies. 

§  81.  A  building  and  loan  association  has  no  riglit  to 
impose  by  by-law  fines  for  the  nonpayment  of  interest  on 
money  borrowed  from  the  association;^^*  and  a  by-law 
which  provides  that  any  stockholder  who  fails  to  pay  his 
monthly  dues  or  interest  shall  pay  a  fine  of  ten  per  cent, 
per  month  upon  the  amount  of  his  indebtedness  will  not  be 
construed  to  refer  to  interest  on  any  loan  from  the  associa- 
tion to  the  stockholders.^^^  A  by-law  of  a  building  asso- 
ciation imposing  a  fine  of  ten  cents  per  share,  each  share 
being  of  the  par  value  of  one  hundred  and  fifty  dollars,  for 
failure  to  pay  an  assessment  thereon,  is  reasonable.^^® 
And  so  is  a  by-law  providing  that,  for  any  default  in  pay- 
ment of  dues,  as  often  as  the  same  may  be  payable,  the 
member  shall  forfeit  the  additional  sum  of  ten  cents  for 
every  such  failure,  and  for  every  dollar  thus  unpaid.^®^ 
A  by-law  providing  for  a  fine  of  ten  cents  per  share  to 
be  imposed  for  each  and  every  month  during  delinquency 
has  been  held  to  be  reasonable.^®^  Likewise,  a  by-law  im- 
posing a  fine  of  five  cents  a  share  for  the  first  default,  and 
ten  cents  for  each  subsequent  default.^®^  But  a  by-law 
providing  that  each   stockholder   who   fails   to   pay   his 

264  Parker  v.  United  States  B.  L.  &  L.  Ass'n  (1882)   19  W.  Va.  744; 
McGannon  v.  Central  Bldg.  Ass'n  (1882)  19  W.  Va.  738. 
205  Occidental  B.  &  L.  Ass'n  v.  Sullivan  (1882)   62  Cal.  394. 

266  McGannon  v.  Central  Bldg.  Ass'n  (1882)  19  W.  Va.  741. 

267  Ocmulgee  B.  &  L.  Ass'n  v.  Thomson   (1874)   52  Ga.  427. 

268  Roberts  v.  American  B.  &  L.  Ass'n  (1896)  62  Ark.  572,  36  S.  W. 
1085. 

269  Iowa  S.  &  L.  Ass'n  v.  Heidi  (1899)  107  Iowa,  297.  77  NT  w.  1050 
(88) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  82 

monthly  assessments  shall  be  fined  for  the  first  and  second 
weeks  five  cents,  for  the  third  week  ten  cents,  for  each 
share  of  stock  that  he  owns,  does  not  allow  a  fine  of  more 
than  fifteen  cents  a  week  on  each  share,  though  there 
is  a  failure  to  pay  assessments  for  several  successive 
months.^^*'  A  by-law  imposing  a  fine  of  twenty-five  cents 
per  share  for  failure  to  pay  interest  installments  when  due, 
and  ten  cents  per  share  for  delinquent  installments  of 
principal,  has  been  held  to  be  oppressive.^^^  And  in  an- 
other case  it  was  said  that,  although  a  by-law  imposing  a 
fine  of  ten  cents  per  share  for  each  month  on  delinquent 
monthly  installments  might  be  legal,  equity  will  not  en- 
force it  where  the  failure  to  pay  is  caused  by  demands  in 
excess  of  the  actual  amount  due,  and  by  threats  to  fore- 
close.^^2 

Same — Same. 

§  82.  As  by-laws  of  this  kind  occur  most  frequently  in 
building  and  loan  associations,  the  principles  contained 
in  the  foregoing  citations  may  be  illustrated  by  saying  that 
a  building  and  loan  association  whose  dues  are  payable 
monthly  may  provide  by  by-law  that  any  member  failing 
to  pay  his  monthly  dues  shall  be  fined,  that  under  such  a 
by-law  a  member  who  fails  to  pay  his  January  dues  may 

STO  Gouchenour  v.  Sullivan  B.  &  L.  Ass'n  (1889)  119  Ind.  441,  21  N. 
B.  1088. 

271  Vierling  v.  Mechanics'  &  Traders'  S.,  L.  &  B.  Ass'n  (1899)  179  111. 
524,  53  N.  B.  979. 

272  Hughes  V.  Farmers'  S.  &  B.  &  L.  Ass'n  (Tenn.  Ch.  App.;  1897)  46 
S.  W.  362. 

(89) 


§  83  BY-LAWS.  [Ch.  3 

be  fined  therefor,  that  if  he  defaults  in  his  February  dues 
he  may  be  fined  for  that  default  also,  but  that  no  addi- 
tional fine  can  be  imposed  on  him  in  February  for  remain- 
ing in  default  as  to  his  January  dues. 

Same — Collection  of  fines. 

§  83.  Fines  imposed  by  the  by-laws  may  be  collected 
by  the  corporation  by  an  action  at  law  against  the  delin- 
quent member,^'''  or  by  deducting  the  amount  of  such 
fines  from  any  dividends  or  other  money  coming  to  him 
from  the  corporation.^^^  But  the  corporation  cannot 
provide  by  by-law  that  neglect  to  pay  a  fine  shall  effect 
a  suspension  of  the  member  until  the  fine  is  paid,  since 
that  would  be  to  infiict  a  penalty  upon  a  penalty .^^^  A 
by-law  imposing  a  fine  cannot  direct  that  the  money  be 
paid  to  a  third  person.^^®  A  by-law  which  provides  that 
a  member  failing  to  pay  certain  dues  shall  be  fined  not 
more  than  five  pounds  or  less  than  two  pounds,  in  the  dis- 
cretion of  the  oflQcers,  is  not  bad  for  uncertainty.^'^'^  A 
corporation  may  provide  that  any  member  who  is  elected 
to  office  and  refuses  to  accept  the  office  shall  be  fined,^^* 
or  that  an  officer  neglecting  his  duties  shall  be  fined.^^® 

273  Graves  v.  Colby  (1838)  9  Adol.  &  B.  356. 

274  Child  V.  Hudson's  Bay  Co.  (1723)  2  P.  Wms.  208. 

275  Adley  v.  Reeves  (1813)  2  Maule  &  S.  53;  Adley  v.  Whitstable  Co. 
(1810)  17  Ves.  315.     But  see  Hussey  v.  Gallagher  (1878)  61  Ga.  92. 

276  Graves  v.  Colby  (1838)  9  Adol.  &  E.  366. 

277  Piper  v.  Chappell  (1845)  14  Mees.  &  W.  624. 

278  Vintners'  Co.  v.  Passey  (1757)  1  Burrows,  235;  Graves  v.  Colby 
(1838)  9  Adol.  &  E.  366. 

279  Company  of  Tobacco  Pipe  Makers  v.  Woodroffe  (1828)  7  Barn.  & 
C.  838. 

(90) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  84 

A  by-law  may  authorize  a  member  who  is  disorderly  at  a 
meeting  to  be  fined,  and  provide  for  expulsion  for  non- 
payment.^®^ 

Same — Expulsion. 

§  84.  A  by-law  of  a  mutual  insurance  company  pro- 
viding that  if  any  member  shall,  for  thirty  days  after 
notice,  neglect  to  pay  his  proportion  of  any  loss,  the  di- 
rectors may  recover  by  suit  the  whole  amount  of  his  pre- 
mium note,  the  proceeds  to  remain  in  the  company's  treas- 
ury, subject  to  losses  that  have  accrued  or  that  may  ac- 
crue until  the  expiration  of  the  term  of  the  member's  in- 
surance, has  been  decided  to  be  good.^*^  A  corporation 
cannot  by  by-law  subject  its  stock  to  forfeiture  for  nonpay- 
ment of  assessments  upon  it  unless  the  power  to  pass  such 
by-law  is  expressly  granted  by  its  charter  ;282  nor  can  it 
provide  by  by-law  for  the  forfeiture  of  other  property.^^' 
Thus,  a  by-law  of  the  Knights  of  Labor  providing  that,  on 
suspension  of  a  local  assembly,  its  property  shall  be  for- 
feited and  shall  vest  in  the  secretary  of  the  general  as- 
sembly, has  been  held  to  be  void,  as  seeking  to  confiscate, 
without  judicial  process,  property  of  which  the  local  as- 

28oSimek  v.  Lodge  No.  86  (1898)  118  Mich.  81,  76  N.  W.  124.  But 
see  People  v.  New  York  Benev.  Soc.  (1875)   3  Hun  (N.  Y.)   364. 

28iCaliill  V.  Kalamazoo  Mut.  Ins.  Co.  (1845)  2  Doug.  (Mich.)  138,  43 
Am.  Dec.  462. 

282  In  re  Long  Island  R.  Co.  (1837)  19  Wend.  (N.  Y.)  37,  32  Am. 
Dec.  429. 

288  Kirk  V.  Nowill  (1783)  1  Term  R.  118. 

(91) 


§  86  BY-LAWS.  [Ch.  3 

sembly  has  the  absolute  title.^**     Of  course  provisions 
as  to  forfeiture  must  be  observed  by  the  corporation.^^* 

Same— Same. 

§  85.  The  penalty  of  expulsion  is  frequently  provided 
for  in  the  by-laws.  It  has  been  held  that  where  the 
charter  of  a  corporation  declared  that,  in  certain  cases, 
members  might  be  expelled,  but  did  not  say  expressly  that 
there  should  be  no  expulsion  except  in  the  cases  specified, 
a  by-law  providing  that  a  member  might  be  expelled  for 
an  offense  not  mentioned  in  the  charter  was  not  neces- 
sarily co;itrary  to  the  charter.^^^  It  would  seem  to  follow 
from  this  decision  that  the  power  to  pass  by-laws  provid- 
ing for  expulsion  of  members  is  one  of  the  inherent  powers 
of  corporations. 

Same — ^Tor  nonpayment  of  dues. 

§  86.  A  mutual  benefit  society  may  pass  a  by-law 
which  provides  that  a  member  who  fails  to  pay  his  dues 
within  thirty  days  after  publication  of  an  assessment  shall 
forfeit  his  membership,^^^  or  that  he  shall  be  suspended.^^^ 

284  Wicks  V.  Monihan  (1891)  130  N.  Y.  232,  29  N.  B.  139.  See  Austin 
V.  Searing  (1857)  16  N.  Y.  112. 

285Tourville  t.  Brotherhood  of  L.  F,  (1894)  54  111.  App.  71;  Catholic 
Order  of  Foresters  v.  Fitzpatrick  (1895)  58  111.  App.  376,  But  see 
Lesseps  v.  Architects'  Co.  (1849)  4  La.  Ann.  316.  i 

286  Commonwealth  v.  St.  Patrick  Benev.  Soc.  (1810)  2  Bin.  (Pa.)  448. 

287  Madeira  v.  Merchants'  Exchange  Mat.  Ben.  Soc.  (1883)  16  Fed. 
749. 

288  Palmetto  Ledge  v.  Hubbell  (1848)  2  Strob.  (S.  C.)  457.  49  Am. 
Dec.  604. 

(92) 


Ch.  3]  SUBJECT-MATTER  OF  BY-LAWS.  §  86 

But  where  the  provision  of  such  by-law  is  that  failure 
to  pay  an  assessment  within  thirty  days  from  the  date  of 
the  notice  shall  be  cause  for  suspension,  a  member  cannot 
legally  be  suspended  for  nonpayment  of  an  assessment  of 
which  he  was  not  notifled.^^^  Where  the  charter  of  an  in- 
corporated board  of  trade  empowers  the  corporation  to 
expel  members  in  the  manner  prescribed  by  its  by-laws,  it 
may  pass  a  by-law  providing  for  the  expulsion  of  mem- 
bers for  breach  of  any  contract,  oral  or  written,^^*^  or  for 
fraudulent  conduct.^^^  By-laws  of  mutual  benefit  socie- 
ties which  provide  that  members  in  arrears  shall  be  sus- 
pended from  benefits  for  a  certain  period  after  such  ar- 
rears have  been  paid  have  been  declared  void  by  some 
courts,^^^  while  other  courts,  in  later  decisions,  have  con- 
sidered them  reasonable.^^^  A  by-law  forfeiting  a  mem- 
ber's funeral  benefits  in  case  his  dues,  although  fully  paid, 
were  not  paid  at  the  precise  time  when  they  became  due, 

289  Supreme  Lodge,  K.  of  H.,  v.  Dalberg  (1891)  138  m.  508,  28  N.  K 
787,  3  Nat.  Corp.  Rep.  348. 

280  Dickenson  v.  Chamber  of  Commerce  (1871)  29  Wis.  45. 

291  People  V.  New  York  Com.  Ass'n  (1864)  18  Abb.  Pr.  (N.  Y.)  282. 

2«2Cartan  v.  Father  Matthew  TJ.  B.  Soc.  (1869)  3  Daly  (N.  Y.)  20; 
Brady  v.  Coachman's  Benev.  Ass'n  (1891)  14  N.  Y.  Supp.  272;  Bueck- 
ing  V.  Blum  Lodge,  L  O.  O.  F.    (1877)  1  City  Ct.  Rep.  (N.  Y.)  51. 

293  Jennings  v.  Chelsea  Division  B.  &  F.  Soc.  (1899)  28  Misc.  Rep. 
556,  59  N.  Y.  Supp.  862;  Rubino  v.  Fraterna  Ass'n  (1899)  29  Misc.  Rep. 
339,  60  N.  Y.  Supp.  461 «»  Alters  T,  Journeyman  Bricklayers'  Protective 
Ass'n  (1898)  43  Wkly.  Notes  Cas.  (Pa.)  336.  And  see  Skelly  v.  Pri- 
vate Coachmen's  B.  &  C.  Soc.  (1884)  13  Daly  (N.  Y.)  2,  in  which  it  was 
said  that  such  a  by-law  would  be  binding  as  against  a  member  who 
had  assented  to  it. 

(93) 


^  86  BY-LAWS.  [Ch.  3 

is  void.^®*  But  a  mutual  benefit  association  may  provide 
by  by-law  that  any  member  indebted  for  one  year  shall  be 
held  to  be  in  arrears,  and  therefore  not  entitled  to  bene- 
fits.2»« 

204  Nelligan  v.  New  York  Typographical  Union  No.  6  (1886)  2  City 
Ct.  Rep.   (N.  Y.)  261. 
295  Cowan  V.  New  York  Caledonian  dab  (1899)  61  N.  Y.  Supp.  714. 

(94) 


CHAPTER  IV. 

CONSTRUCTION  OF  BY-LAWS. 

General  Pbiwciples. 
§  87.    Rules  of  statutory  construction  applicable. 

88.  Question  of  law  or  fact. 

89.  Partial  invalidity. 

Pabticulak  By-Laws  Construed. 

§  90.  Illustrations. 

91.  By-laws  relating  to  officers  and  agents. 

92.  By-laws  relating  to  meetings  and  elections. 

93.  By-laws  relating  to  dues  and  assessments. 

94.  By-laws  relating  to  designation  of  beneficiary, 

95.  By-laws  relating  to  benefits  and  loans. 

General  Principles. 

Eules  of  statutory  constniction  applicable. 

§  87.  In  construing  by-laws,  the  courts  make  use  of 
the  same  general  rules  as  in  construing  statutes.^  Thus, 
all  the  by-laws  of  a  corporation  should  be  construed  to- 
gether, so  as  to  reconcile  apparently  conflicting  provisions 
of  different  sections.^     They  ought  to  have  a  reasonable 

1  Amesbury  y.  Bowditch  Mut.  Fire  Ins.  Co.  (1856)  6  Gray  (Mass  ) 
607. 

2  Hartford  v.  Co-operative  Mut.  Homestead  Co.  (1880)  128  Mass.  494* 
O'Grady  v.  Knights  of  Columbus  (1892)  62  Conn.  223,  25  Atl.  Ill* 
Badesch  v.  Congregation  B.  of  W.  (1898)  23  Misc.  Rep.  160,  50  N.  T. 
Supp.  958. 

(95) 


§  87  BY-LAWS.  [Ch.  4 

construction,*  and  are  not  to  be  so  construed  as  to  make 
them  void,  although  every  particular  reason  for  enacting 
them  does  not  appear.^  In  other  words,  a  by-law  ought 
to  be  so  construed,  if  possible,  as  to  make  it  valid.''  And 
in  analogy  to  the  rule  of  construction  of  penal  statutes, 
it  is  held  that  by-laws  imposing  penalties  and  creating  for- 
feitures are  to  be  strictly  construed.®  So,  also,  are  by- 
laws requiring  submission  of  claims  to  the  association  as  a 
condition  precedent  to  resort  to  the  courts.'^  And  it  has 
been  held  that,  in  mutual  insurance  controversies,  that 
construction  is  to  be  adopted  which  is  most  favorable  to 
the  insured.®  A  by-law  of  a  mutual  benefit  society  which 
forbids  its  members  joining  the  army  is  to  be  strictly 
construed.® 

8Hibernia  Fire  Engine  Co.  v.  Harrison  (1880)  93  Pa.  St.  269;  Su- 
preme Lodge,  K,  of  P.,  V.  Knight  (1884)  9S  Ind.  374;  Maynard  v.  Loco- 
motive Engineers'  Mut.  L.  &  A.  Ins.  Ass'n  (1897)  14  Utah,  458,  47  Pac. 
1030;  Carney  v.  New  York  Life  Ins.  Co.  (1900)  162  N.  Y.  453,  57  N,  E. 
78,  49  L.  R.  A.  471,  20  Nat.  Corp.  Rep.  822. 

*Vinter's  Co.  v.  Passey  (1757)  1  Burrows,  239;  Hibernia  Fire  En- 
gine Co.  V.  Commonwealth  (1880)  93  Pa.  St.  264. 

e  Reg.  V.  Saddlers'  Co.  (1863)  10  H.  L.  Cas.  426. 

6  Occidental  B.  &  L.  Ass'n  v.  Sullivan  (1882)  62  Cal.  394;  People  v. 
St.  George's  Soc.  (1873)  28  Mich.  261;  Ottawa  Union  Bldg.  Soc.  v. 
Scott  (1865)  24  Up.  Can.  Q.  B.  341. 

7  Brotherhood  of  Railroad  Trainmen  v.  Newton  (1898)  79  111  App 
500. 

8  Finch  V.  Grand  Grove,  U.  A.  O.  of  D.  (1895)  60  Minn.  308,  62  N.  W. 
384;  Supreme  Lodge  National  Reserve  Ass'n  v.  Mondrowski  (1899)  20 
Tex.  Civ.  App.  322,  49  S.  W.  919;  Eastern  B.  &  L.  Ass'n  v.  Olmsted 
(1900)   16  App.  D.  C.  387. 

»  Franklin  Beneficial  Ass'n  v.  Commonwealth  (1849)  10  Pa.  St.  357. 
This  decision  was  rendered  soon  after  the  Mexican  war  and  seems 
(96) 


Ch.  4]  CONSTRUCTION  OF  BY-LAWS.  §  88 

Question  of  law  or  fact. 

§  88.  The  validity  of  a  by-law  is  purely  a  question  of 
law;  it  is  for  the  judge,  and  not  for  the  jury,  to  determine 
whether  a  by-law  is  reasonable,  and  what  it  means.^®  But 
where  the  language  of  a  by-law  contains  ambiguities  that 
require  extrinsic  evidence  to  explain  them,  it  has  been 
held  in  Wisconsin  that  the  interpretation  of  such  am- 
biguous by-laws  is  for  the  jury.^^  And  the  rule  is  laid 
down  in  New  Jersey  that,  while  the  reasonableness  of  a 
by-law  of  a  corporation  is  a  question  of  law  for  the  court, 
the  reasonableness  of  a  mere  corporate  regulation  is  a 
question  of  fact  for  the  jury.^^  In  case  of  an  ambiguity  in 
a  by-law  of  a  corporation,  the  court  will  not  give  it  a  con- 
struction opposed  to  any  consistent  and  practical  con- 
struction which  it  has  received  from  members  of  the  so- 
ciety, where  such  a  construction  is  not  unreasonable  or 

to  be  based  on  the  theory  that  the  by-law  in  question,  while  not  exactly 
void  as  against  public  policy,  was  nevertheless  of  an  unpatriotic  and 
questionable  character. 

10  State  V.  Overton  (1854)  24  N.  J.  Law,  440,  61  Am.  Dec.  675;  Hi- 
bernia  Fire  Engine  Co.  v.  Harrison  (1880)  93  Pa.  St.  269;  Cartan  v. 
Father  Matthew  U.  B.  Soc.  (1869)  3  Daly  (N.  Y.)  22;  People  v.  Throop 
(1834)  11  Wend.  (N.  Y.)  186;  State  v.  Bank  of  Louisiana  (1827)  5  Mart. 
(N.S.;  La.)  327,344;  Hibernia  Fire  Engine  Co.  v.  Commonwealth  (1880) 
93  Pa.  St.  264;  Scholl  v.  Sadoury  (Pa.;  1894)  25  Pittsb.  Leg.  J.  (N.  S.) 
43;  Bearden  v.  People's  B.  L.  &  S.  Ass'n  (Tenn.  Ch.  App.;  1898)  49  S. 
W.  64;  Carney  v.  New  York  Life  Ins.  Co.  (1900)  162  N.  Y.  453,  57  N.  E. 
78.  49  L.  R.  A.  471,  20  Nat.  Corp.  Rep.  822;  Matthews  v.  Associated 
Press  (1893)  136  N.  Y.  333,  32  N.  E.  981. 

11  State  V.  Conklin  (1S74)  34  Wis.  21. 

12  Morris  &  E.  R.  Co.  v.  Ayres  (1862)  29  N.  J.  Law,  395;  Compton 
V.  Van  Volkenburgh  (1870)  34  N.  J.  Law,  134. 

(97) 

Boisot  By  Laws— 7. 


§  89  BY-LAWS.  [Cb.  4 

contrary  to  justice  or  morality  or  the  rules  of  law  and 
public  policy.^^  But  where  the  language  used  is  clear  and 
unambiguous,  or  the  by-laws  are  susceptible  of  definite 
construction  without  extraneous  proof,  the  construction 
given  to  the  by-law  by  the  officers  of  the  corporation  will 
not  influence  the  courts  in  construing  them.^* 

Partial  invalidity. 

§  89.  A  single  by-law  may  be  good  in  part  and  bad  in 
part,^^  but  this  can  only  be  the  case  where  the  two  parts 
are  entirely  distinct  from  each  other.  If  the  part  which 
ic  void  influences  the  whole,  the  entire  by-law  is  void.^° 
This  rule  applies  also  to  different  clauses  of  the  same 
by-law.  Thus,  where  one  clause  of  a  by-law  contains  an 
illegal  restriction  on  the  right  of  members  to  sue  the  cor- 
poration in  any  county  except  one,  and  also  a  valid  limita- 
tion upon  the  time  within  which  the  members  may  bring 
suit  against  the  corporation,  the  invalidity  of  the  former 
provicion  will  not  affect  the  latter  one.^^ 

13  state  V.  Conklin  (1874)  34  Wis.  21;  McDonough  v.  Hennepin 
County  Catholic  B.  &  L.  Ass'n  (1805)  62  Minn.  122,  64  N.  W.  lOG. 

i*In  re  Bacliman  (1875)  2  Cent.  Law  J.  119,  12  Nat.  Eink.  Reg.  223; 
Wiggin  V.  Kniglits  of  Pytliias  (1887)  31  Fed.  122;  Brendon  v.  WOil©y 
(1894)  8  Misc.  Rep.  253,  28  N.  Y.  Supp.  557;  Thomas  v.  Societa  Itallanl 
di  Mutuo  Soccorso  (1895)  10  Misc.  Rep.  746,  31  N.  Y.  Supp.  S15;  Badesch 
V.  Congregation  B.  of  W.  (1898)  23  Misc.  Rep.  160,  50  N.  Y.  Supp.  958. 

16  Rex  V.  Free  F.  «6;  D.  of  Faversham  (1799)  8  Term  R.  953;  Gun- 
makers'  See.  V.  Fell  (1742)  Willes,  390. 

16  state  V.  Curtis  (1874)  9  Nev.  337. 

17  Amesbury  v.  Bowdltcb  M.  F.  Ins.  Co.  (1856)  6  Gray  (Maei.)  GOT* 
(08). 


Ch.  4]  CONSTRUCTION  OF  BY-LAWS.  |  90 

Pabticulae  Bt-Laws  Constbued. 
Illustrations. 

§  90.  In  an  English  case  it  appeared  that  a  person 
could  not  be  in  the  livery  of  the  Company  of  Poulters  un- 
less he  was  a  freeman  of  the  city  of  London.  The  company 
passed  a  by-law  authorizing  the  admission  into  its  livery 
of  any  freeman  of  the  company.  In  order  to  admit  the 
validity  of  the  by-law,  the  courts  construed  it  to  mean  any 
freeman  of  the  company  who  was  also  a  freeman  of  the 
city.^^  The  rule  that  by-laws  should  be  construed  to- 
gether was  applied  by  the  supreme  court  of  Pennsylvania 
to  a  case  where  one  by-law  of  a  corporation  gave  the  pres- 
ident the  general  charge  and  direction  of  the  business  of 
the  company,  as  well  as  of  all  matters  connected  with  the 
interests  and  objects  of  the  corporation,  and  another  by- 
law intrusted  the  doing  of  a  particular  act  to  a  commit- 
tee of  the  directors.  The  court  held  that  the  general 
words  of  the  flrst  by-law  did  not  authorize  the  president 
to  do  the  act  which  had  been  intrusted  to  the  committee.^® 
And  a  by-law  of  a  banking  corporation  authorizing  the 
president  to  certify  checks  drawn  upon  the  bank  has  been 
construed  not  to  extend  to  checks  drawn  by  the  president 
himself.^"  In  a  recent  English  case  it  appeared  that  an 
incorporated  company  of  saddlers  had  passed  a  by-law  to 
the  effect  that  no  person  who  had  become  a  bankrupt  or 
otherwise  insolvent  should  be  eligible  as  a  director.     The 

18  Poulters'  Co.  v.  Phillips  (1840)  6  Bing.  N.  C.  314. 

19  Twelfth  St.  Market  Co.  v.  Jackson  (1883)   102  Pa.  St.  269. 

20  Claflin  V.  Farmers'  &  Citizens'  Bank  (1862)  25  N.  Y.  293. 

(99) 


§  91  BY-LAWS.  [Ch.  4 

court  construed  this  by-law  as  not  applying:  to  one  who, 
though  not  able  to  pay  all  his  debts  in  full,  had  committed 
no  overt  act  of  insolvency.^^  A  by-law  providing  for  arbi- 
tration in  cases  of  dispute  between  a  society  and  its  mem- 
bers applies  only  to  disputes  regarding  rights  of  member- 
ship, and  not  to  a  suit  by  the  society  against  a  member  to 
foreclose  a  mortgage,^^  The  reasonableness  of  by-laws  of 
voluntary  incorporated  societies  will  not  be  passed  on  by 
the  courts.^^ 

By-laws  relating  to  officers  and  agents. 

§  91.  A  contract  for  the  employment  during  life  of  a 
person  to  act  in  a  medical  capacity  for  a  life  insurance 
company  has  been  held  to  be  in  excess  of  the  authority 
conferred  upon  the  president  and  actuary  by  a  by-law 
empowering  them  to  "appoint,  remove,  and  fix  the  compen- 
sation of  each  and  every  person,  except  agents,  employed 
by  the  company,  where  the  members  of  the  board  of  trus- 
tees, to  wliom  the  management  of  the  corporation  was  en- 
trusted, held  oflBce  only  for  four  years.^^  Where  the  by- 
laws of  an  insurance  company  provide  for  the  election 
of  the  president,  vice  president,  and  actuary  by  the  board 
of  trustees,  and  for  the  appointment  by  the  board  of  resi- 
dent physicians;  that  the  supervisory  and  agency  commit- 

21  Queen  v.  Saddlers'  Co.  (1863)  10  H.  L.  Cas.  404. 

22  Delaney  v.  Sandhurst  Ben.  Bldg.  &  Inv.  Soc.  (1879)  5  Vict.  Law 
R.  189. 

23  Kehlenbeck  v.  Logeman  (1882)  10  Daly  (N.  Y.)  447;  Robinson  v. 
Yates  City  Lodge  (1877)  86  111.  599. 

2*  Carney  v.  New  York  Life  Ins.  Co.  (1900)  162  N.  Y.  453,  57  N.  E.  78. 
(100) 


Ch.  4]  CONSTRUCTION  OF  BY-LAWS.  §  91 

tee  should  appoint  the  agents,  and  that  the  president  and 
vice  president  should  appoint  all  other  persons  employed, 
— an  attempt  on  the  part  of  the  trustees  to  employ  a  re- 
tiring president  in  an  advisory  capacity  is  without  authori- 
ty.^^ A  by-law  providing  that  "no  salary  shall  be  paid  to 
the  officers,  »  *  *  except  to  the  secretary,"  does  not 
provide  for  the  compensation  of  the  secretary,  but  simply 
leaves  it  open  to  the  directors  to  provide  compensation  for 
him.2®  And  the  same  effect  has  been  given  to  a  by-law 
which  declared  that  the  salary  of  the  president  should  be 
fixed  by  the  board  of  directors.^''^  Under  by-laws  whicli 
require  all  contracts  and  agreements  entered  into  by  the 
corporation  to  be  signed  by  its  president,  and  also  require 
the  secretary  to  issue  and  countersign  all  orders  drawn  on 
the  treasurer,  a  note  of  the  corporation  signed  by  the  pres- 
ident is  binding,  although  not  countersigned  by  the  sec- 
retary .^^  In  a  case  where  the  by-laws  of  a  corporation  en- 
gaged in  buying  and  selling  machinery  authorized  its  pres- 
ident to  buy  and  sell  the  articles  in  which  the  corporation 
dealt,  without  first  obtaining  the  sanction  of  the  directors, 
it  was  held  that  the  president  had  authority  to  purchase  a 
boiler  on  credit,  and  give  the  corporation's  note  there- 
for.^^     A  by-law  of  a  benefit  association  providing  that  the 

25  Beers  v.  New  York  Life  Ins.  Co.  (1892)  66  Hun,  75,  20  N.  Y.  Supp. 
788. 

26  pfeifEer  v.  Lansberg  Brake  Co.  (1891)  44  Mo.  App.  59. 

27  Wood  V.  Lost  Lake  &  C.  Mfg.  Co.  (1890)  23  Or.  20,  23  Pac.  848. 

28  Peatman  v.  Centerville  L.,  H.  &  P.  Co.  (1896)  100  Iowa,  245,  69  N. 
W.  541.     See,  also,  post,  c.  5,  §  6. 

29  Siebe  v.  Joshua  Hendy  Machine  Works  (1890)  86  Cal.  390,  25  Pac. 
14. 

(101) 


§  92  BY-LAWS.  [Cii.  4 

executive  committee  shall  have  power  to  reinstate  a  delin- 
quent member  at  any  time  within  a  year,  upon  satisfactory 
evidence  of  good  health,  and  payment  of  all  delinquent 
premiums,  does  not  bind  the  committee  to  reinstate.^"  A 
by-law  of  a  savings  bank  requiring  its  "best  efforts"  to 
avoid  mispayments  calls  for  more  than  ordinary  care  and 
diligence.^  ^ 

By-laws  relating  to  meetings  and  elections. 

§  92.  Where  the  by-laws  require  the  directors  to  hold 
regular  meetings  in  a  specified  place,  special  meetings  are 
not  within  the  restriction.^^  And  where  the  by-laws 
authorize  the  president  to  call  special  meetings  of  the 
directors  upon  giving  notice  of  the  time  and  place  thereof, 
and  such  place  is  not  prescribed  by  by-law,  the  president 
may  call  a  si)ecial  meeting  at  a  place  other  than  the  prin- 
cipal place  of  business  of  the  company.^^  i 

Under  charter  provisions  that  alterations  of  the  by-laws 
may  be  made  only  at  a  general  meeting  of  the  members 
convened  by  public  notice,  as  in  the  case  of  election  of 
directors,  and  that  the  president,  when  required  by  twen- 
ty members,  shall  call  the  general  meeting  by  giving  notice, 
as  in  case  of  election  for  directors,  for  the  transaction  of 
such  business  as  may  be  specified  in  such  notice,  the  by- 
laws cannot  be  changed  at  an  annual   meeting,   where 

30  Harrington  v.  Keystone  Mut.  Ben.  Ass'n  (1899)  190  Pa.  St.  77,  42 
Atl.  523. 
'  31  Allen  V.  Williamsburgh  Sav.  Bank  (1876)  2  Abb.  N.  C.  342. 

32  Ashley  Wire  Co.  v.  Illinois  Steel  Co.  (1896)  164  111.  149,  45  N.  B.  410. 

88  Corbett  v.  Woodward   (1879)   5  Sawy.  403,  Fed.  Gas.  No.  3,223. 
(102) 


Ch.  4]  CONSTRUCTION  OP  BY-LAWS.  §  92 

notice  is  given  only  of  the  election  of  directors.**  Under 
a  by-law  providing  that,  when  the  three  directors  consti- 
tuting the  board  were  present,  a  meeting  could  be  held 
without  notice,  all  three  directors  must  not  only  be  pres- 
ent, but  must  also  consent  to  hold  the  meeting.^**  A  by- 
law providing  that  a  majority  of  the  stock  present  in  per- 
son or  by  proxy  at  any  meeting  of  the  stockholders  shall 
constitute  a  quorum  requires  the  presence  in  person  or  by 
proxy  of  a  majority  of  all  of  the  stock  of  the  corporation 
to  make  a  quorum.^^  Where  the  charter  of  a  corporation 
provides  that  the  corporate  powers  shall  be  exercised  by  a 
board  of  directors,  to  consist  of  twenty-three  persons,  and 
specifies  power  to  adopt  such  by-laws  as  the  president  and 
directors  shall  judge  necessary  to  carry  on  its  business,  but 
the  charter  is  silent  as  to  how  many  directors  shall  consti-' 
tute  a  quorum  for  the  transaction  of  business,  the  directors 
may  by  by-law  enact  that  five  directors,  of  whom  the  presi- 
dent shall  alw^ays  be  one,  or,  in  his  absence,  seven  directors, 
shall  constitute  a  quorum.*^  Where  a  corporation  having 
a  capital  stock  of  thirty  thousand  dollars,  divided  into  six 
hundred  shares  of  fifty  dollars  each,  adopted  a  by-law  pro- 
viding that  at  all  meetings  of  the  company  there  must  be 
present  at  least  one-third  of  the  stockholders,  holding  at 

34  Mutual  Fire  Ins.  Co.  v.  Farquhar  (1898)  86  Md.  668,  39  Atl.  527. 

85  state  V.  Manhattan  Rubber  Mfg.  Co.  (1899)  149  Mo.  181,  50  S.  W. 
321. 

86  In  re  Election  of  Directors  of  Rapid  Transit  Ferry  Co.  (1897)  43 
N.  Y.  Supp.  538. 

sTHoyt  V.  Shelden  (1858)  3  Bosw.  (N.  Y.)  267;  Hoyt  v.  Thompson's 
Ex'r  (1859)  19  N.  Y.  215. 

(103) 


§  93  BY-LAWS.  [Ch.    4 

least  one-third  of  the  shares  of  stock,  to  constitute  a  quo- 
rum, and  only  ninety-six  shares  of  the  stock  were  subscrib- 
ed for  or  issued,  it  was  held  that  the  presence  at  a  stock- 
holders' meeting  of  one-third  of  the  stockholders  in  num- 
ber, holding  at  least  one-third  of  the  ninety-six  shares  is- 
sued or  subscribed  for,  was  sufficient  to  constitute  a  quo- 
rum.^® 

By-laws  relating  to  dues  and  assessments. 

§  93.  Where  the  by-laws  of  a  mutual  benefit  associa- 
tion require  notice  of  each  assessment  to  be  given  to  each 
member,  and  provide  that  failure  to  pay  such  assessment 
within  thirty  days  from  the  date  of  notice  shall  be  cause 
for  suspension,  a  member  cannot  be  suspended  for  nonpay- 
ment of  an  assessment  of  which  it  is  not  shown  that  he 
was  notified.^^  And  where  the  by-laws  require  assess- 
ments to  be  paid  within  a  certain  number  of  days  from  the 
date  of  the  notice  thereof,  the  date  will  be  considered  to 

38  Castner  v.  Twitchell-Champlin  Co.  (1898)  91  Me.  524,  40  Atl.  558. 
This  case  overrules  a  previous  decision  of  the  same  court  (Ellsworth 
"Woolen  Mfg.  Co.  v.  Faunce  [1887]  79  Me.  440),  where  an  election  of  di- 
rectors was  held  illegal  under  the  following  facts:  The  by-law  pro- 
vided that  "the  capital  stock  of  the  company  shall  be  $10,000,  divided 
into  400  shares  of  $25  each,"  and  that  "no  business  shall  be  transacted 
at  any  meeting  of  the  stockholders,  unless  a  majority  of  the  stock  Is 
represented,  except  to  organize  the  meeting  and  adjourn  to  some  future 
time."  But  243  shares  had  been  subscribed  for.  It  required  201  shares 
to  constitute  a  majority,  and  that  number  was  not  present,  but  the 
meeting  considered  that  the  by-law  referred  to  the  majority  of  the 
actually  subscribed  stock,  and  proceeded  to  elect  directors,  which  elec- 
tion was  finally  held  illegal. 

39  Supreme  Lodge,  K.  of  H.,  v.  Dalberg  (1891)  138  111.  508,  28  N.  E.  785. 
(104) 


Ch.  4]  CONSTRUCTION  OF  BY-LAWS.  §  93 

mean  the  date  it  was  delivered  or  received,  not  the  date 
written  in  the  notice  or  the  date  of  mailinj]j.^^  A  by-law 
providing  for  notice  of  arrears  by  the  financial  secretary 
means  written  notice;  therefore  a  verbal  statement  that 
a  delinquent  would  better  "square  his  account"  is  insuf- 
ficient.*^ Where  an  insurance  company's  articles  of  as- 
sociation provided  that  members  should  pay  their  assess- 
ments within  thirty  days  after  receiving  notice  thereof, 
before  a  policy  can  be  forfeited  for  nonpayment,  actual 
notice  to  the  member  must  be  shown,  though  a  by-law 
provided  that  notice  of  assessments  should  be  given  by 
publication  in  one  or  more  newspapers.^^  Under  a  by- 
law providing  for  forfeiture  for  failure  to  pay  any  as- 
sessment within  thirty  days  from  the  date  of  the  notice 
thereof,  a  notice  which  is  mailed  so  as  to  reach  the  insured 
November  30th,  demanding  payment  on  or  before  Decem- 
ber 28th,  is  not  sufficient  to  sustain  a  forfeiture.*^  In 
another  case,  the  by-laws  of  a  benefit  association  required 
the  collector  to  notify  members  of  assessments,  and  pro- 
vided that  notice  should  be  personal  or  by  mail  at  the  last 
known  post-office  address  or  residence,  and  that  a  member 
failing  to  pay  within  thirty  days  from  date  of  the  notice 
should  be  suspended.     A  member  who  was  ill  sent  the 

*o  Protection  Life  Ins.  Co.  v.  Palmer  (1876)  81  111.  88;  Grand  Lodge, 
I.  O.  of  M.  A.,  V.  Besterfleld  (1890)  37  111.  App.  522. 

41  Schafer  v.  United  Brotherhood  of  Carpenters  (1898)  22  Misc.  Rep. 
363,  49  N.  Y.  Supp.  151. 

*2  Schmidt  v.  German  Mut.  Ins.  Co.  (1892)  4  Ind.  App.  340  30  N  E 
«39. 

*3  United  States  Mut.  Ace.  Ass'n  v.  Mueller  (1894)  151  111.  254,  37  N. 
E.  882. 

(105) 


§  93  BY-LAWS.  [Ch.  4 

amount  of  the  assessment,  together  with  notice  of  a  change 
of  residence,  to  the  lodge.  The  number  of  the  member's 
house  was,  by  mistake,  copied  incorrectly  on  the  books,  and 
notice  of  a  subsequent  assessment,  sent  to  such  address, 
was  never  received  by  the  member.  It  was  held  that  fail- 
ure to  pay  such  assessment  within  the  required  time  did 
not  work  a  suspension.*'*  Under  by-laws  requiring  notice 
of  assessments,  but  not  prescribing  the  form,  a  notice 
specifying  the  number  of  the  assessment,  and  bearing  the 
seal  of  the  association,  received  by  a  member  inclosed  in  an 
envelope  addressed  to  him  at  his  residence,  is  sufficient,  al- 
though not  signed  by  the  officer  whose  duty  it  was  to  give 
the  notice,  and  not  addressed  to  the  member  on  the  notice 
itself.*^  Where  the  rules  of  a  benefit  association  required 
the  supreme  secretary,  when  the  benefit  fund  was  insuffi- 
cient, to  collect  a  fixed  assessment,  such  notice  from  the 
supreme  secretary  was  held  to  be  presumptive  proof  that 
the  assessment  was  necessary.*®  Under  a  by-law  requir- 
ing notice  that,  if  arrears  of  dues  were  not  paid  on  or  be- 
fore the  first  regular  meeting  of  the  following  month,  the 
member  would  be  suspended,  a  notice  to  appear  in  the 
lodge  hall  at  the  meeting  to  pay  the  arrears,  on  penalty  of 
suspension,  is  not  binding,  since  under  the  by-law  the 
member  might  send  the  money  on  or  before  the  meeting, 

**  Waterworth  v.  American  Order  of  Druids  (1895)  164  Mass.  574,  42 
N.  E.  106. 

45  Hansen  v.  Supreme  Lodge,  K.  of  H.   (1892)  140  111.  301,  29  N.  E. 
1121. 

48  Demings  v.  Supreme  Lodge,  K.  of  P.  (1892)  131  N.  Y.  522,  30  N. 
E.  572. 
(106) 


Ch.  4]  CONSTRUCTION  OF  BY-LAWS.  §  94 

while  the  notice  required  him  to  attend  in  person.^^  A 
continuing  agreement  that  a  member's  dues  should  be  paid 
out  of  printing  and  supplies  to  be  furnished  by  him  is  not 
in  violation  of  a  by-law  providing  that  all  dues  must  be 
paid  by  the  twenty-eighth  of  each  month,  since  such 
agreement  is  equivalent  to  advance  payment.*^  Where 
the  by-laws  and  pass-book  of  a  building  and  loan  associa- 
tion show  that  payments  of  dues  should  be  made  to  the 
treasurer,  payment  made  to  the  secretary  will  not  bind  the 
aesociation.^^ 

By-laws  relating  to  designation  of  beneficiary. 

§  94.  Where  a  benefit  society  has  prescribed  by  its  by- 
laws in  v;hat  manner  a  member  may  change  his  beneficiary, 
that  form  must,  of  course,  be  followed  to  make  a  valid 
change.^°  But  where  a  benefit  certificate  has  been  lost, 
so  that  it  is  impossible  for  a  member  to  change  the  bene- 
ficiary by  indorsement  thereon,  as  required  by  the  by-laws^ 
equity  will  recognize  and  enforce  a  designation  of  a  new 
beneficiary  by  will,  or  by  any  other  method  which  plainly 
indicates  the  intention  of  the  member.^^ 

Under  a  by-law  providing  that  every  lodge  shall  keep  a 
book  in  which  every  member  shall  declare  in  writing,  upon 

*7  District  Grand  Lodge,  No.  4,  O.  K.  S.  B.,  v.  Menken  (1896)  67  IIU 
App.  576. 

*8  Bixby  V.  Grand  Lodge,  A.  O.  U.  W.  (1897)  101  Iowa,  505,  70  N,  W- 
7S7. 

48  Killian  v.  Building  &  Loan  Ass'n  (1898)  21  Pa.  Co.  Ct.  Rep.  E8. 

Co  Masonic  Mut.  Life  Ass'n  v.  Jones  (1893)  154  Pa.  St.  107,  26  AtU 
255;  Wilson  v.  Bryce  (1899)  43  App.  Div.  491,  60  N.  Y.  Supp.  132. 

61  Grand  Lodge,  A.  O.  U.  W.,  v.  Noll  (1892)  90  Mieh.  37.  51  N,  W.  263. 

(107) 


§  94  BY-LAWS.  [Ch.  4 

a  blank  form  therein  provided,  to  whom  the  amount  of  his 
benefit  shall  be  paid  upon  his  death,  and  requiring  that  the 
names  of  such  beneficiaries  shall  be  written  in  full,  a  des- 
ignation, "Payable  to  such  parties  as  provided  for  in  my 
will,"  is  good.^^  But  a  rule  requiring  the  insured  to  file  a 
written  petition  with  his  court,  stating  the  desired  change 
of  beneficiary,  is  not  complied  with  by  writing  a  note  to  the 
secretary,  which  the  secretary  destroyed  as  a  mere  memo- 
randum, after  changing  the  beneficiary  in  the  original  cer- 
tificate ;  nor  is  failure  to  file  such  a  petition  excused  by  the 
failure  of  the  supreme  court  to  provide  application  blanks 
in  accordance  with  another  rule.^^  When  the  by-laws  pro- 
vide that  a  change  of  beneficiaries  can  be  made  only  by  sur- 
render of  the  old  certificate,  and  the  issue  of  a  new  one,  a 
change  cannot  be  made  from  a  wife  to  another  by  will.^^ 
The  administrator  of  the  beneficiary  named  in  the  certifi- 
cate is  entitled  to  the  proceeds,  though  the  beneficiary  died 
before  the  insured,  where  the  by-laws  provide  that  the  in- 
sured may  change  the  beneficiary  at  will  in  writing  on  the 
certificate,  and  the  insured  failed  to  designate  another 
beneficiary  after  the  one  named.*^^ 

In  an  Illinois  case  it  appeared  that  one  by-law  of  a  bene- 
fit society  provided  that  "no  will  shall  be  permitted  to  con- 
trol the  appointment  or  distribution  of,  or  rights  of  any 

62  Grand  Lodge  v.  Ohnstein  (1898)   85  111.  App.  355. 

03  Independent  Order  of  Foresters  v.  Keliher  (1899)  36  Or.  501,  59 
Pac.  324,  1109,  60  Pac.  563. 

54  Charch  v.  Charch  (1898)  57  Ohio  St.  561,  49  N.  E.  408. 

65  Thomas  v.  Cochran  (1899)  89  Md.  390,  43  Atl.  792. 
(108) 


Ch.  4]  CONSTRUCTION  OF  BY-LAWS.  94 

person  to,  any  endowment  payable  by  this  order."  An- 
other provided  that,  "in  the  event  of  the  death  of  all  the 
beneficiaries  designated  by  a  member  in  accordance  with 
the  by-laws  of  the  order  before  the  death  of  such  member, 
if  he  shall  have  made  no  further  disposition  thereof,  the 
benefit  shall  be  paid"  to  certain  designated  persons.  It 
was  held  that  the  first  by-law  was  intended  to  secure  the 
rights  of  persons  named  as  beneficiaries  in  the  certificate 
from  subsequent  disposition  of  the  endowment  by  the  mem- 
ber's will  during  their  lifetime,  and  the  second  recognized 
the  member's  right,  upon  the  death  of  his  named  benefici- 
ary, to  dispose  of  the  endowment  by  will  to  any  person 
eligible  as  a  beneficiary,^^  Under  a  by-law  providing  that, 
on  the  death  of  a  member,  it  will  pay  a  certain  sum  to  his 
widow,  child  or  children,  parent  or  parents,  etc.,  in  whole 
or  in  part,  in  such  proportions  to  each  as  the  same  shall 
have  been  assigned  and  made  payable  by  the  member  by 
written  notice  filed  with  the  secretary  prior  to  his  decease, 
the  association  is  liable,  in  the  absence  of  any  assignment 
filed  by  such  member,  to  pay  to  the  persons  designated,  in 
the  order  named,  the  whole  sum  specified  in  the  by-law.'' 
A  by-law  providing  that,  in  the  absence  of  a  widow  or  chil- 
dren, the  fund  shall  be  paid  to  the  next  of  kin  of  the  de- 
ceased within  the  limit  of  representation  prescribed  by 
statute,  has  been  construed  to  mean  the  statute  existing 
at  the  time  of  the  member's  decease.^* 

B6  High  Court,  C.  O.  of  F.,  v.  Malloy  (1897)  169  111.  58,  48  N.  E.  392. 

57  Munroe  v.  Providence  Permanent  F.  R.  Ass'n  (1896)   19  R.  I.  491, 
34  Atl.  997. 

58  Kemp  V.  New  York  Produce  Exchange  (1898)  34  App.  Div.  175,  54 
N.  Y.  Supp.  678. 

(109) 


§  94  BY-LAWS.  [Ch.  4 

In  a  recent  Massachusetts  case  a  by-law  provided  for  a 
benefit  to  be  paid  to  the  person  designated  by  a  member  in 
writing  on  the  certificate  or  otherwise,  and,  in  the  absence 
of  such  designation,  to  the  widow,  if  any,  and  so  on. 
Afterwards  the  by-law  was  amended  by  making  all  benefits 
payable  to  such  person  or  persons  as  the  member's  certifi- 
cate requires  who  may  have  an  insurable  interest,  as  pro- 
vided in  the  section  defining  the  object  of  the  association 
to  be  to  assist  the  widows  or  orphans,  or  such  other  per- 
sons as  may  hold  an  assignment  of  the  certificate  at  the 
time  of  the  member's  death.  The  society  requested  out- 
standing certificates  to  be  surrendered,  and  new  certifi- 
cates taken  out,  but  the  deceased  member  never  took  out  a 
new  certificate,  nor  designated  a  beneficiary  in  any  way. 
The  court  held  that  the  fund  went  to  the  widow,  and  not  to 
the  administrator  of  the  estate  of  the  deceased.^^  Where, 
under  a  by-law  providing  that  no  certificate  shall  be  made 
payable  to  "estate,"  nor  to  other  than  those  related  by  ties 
of  consanguinity  or  affinity,  a  member,  in  his  petition  for 
membership,  declares  the  benefit  payable  to  his  fiancee,  it 
has  been  held  that,  in  the  absence  of  a  clause  prohibiting 
the  corporation  from  contracting  specially  with  a  mem- 
ber for  payment  to  other  than  the  persons  named,  the 
benefit  would  go  to  the  fiancee,  she  still  being  such  at  the 
member's  death.^*' 

CO  Hadley  v.  Odd  Fellows'  Beneficial  Ass'n  (1899)  173  Mass.  583,  54 
N.  B.  345. 

CO  Jacobs  V.  Artisans'  Order  of  Mutual  Protection  (1900)  9  Pa.  Dist. 
nep.  54. 


Oh.  4]  CONSTRUCTION  OF  BY-LAWS.  g  94 

In  an  Illinois  case  it  appeared  that,  althouj?li  the  statute 
required  that  benefits  should  be  payable  to  an  affianced 
husband  or  wife,  a  by-law  provided  that  they  should  be 
payable  only  to  kinsmen  and  those  dependent  upon  the  de- 
ceased. It  was  held  that,  where  the  deceased,  in  his  appli- 
cation, directed  that  the  benefit  should  be  payable  to  his 
affianced  wife,  though  the  society  refused  to  issue  to  him  a 
certificate  naming  her  as  beneficiary,  she  could  maintain 
an  action  therefor.®^  Where  the  constitution  and  by-laws 
of  a  mutual  benefit  association  recognize  as  beneficiaries 
the  heirs  of  a  deceased  member,  the  word  "heirs,"  if  not 
otherwise  limited,  means  those  who  are  entitled  to  receive 
the  estate  under  the  statute.*'^  Where  the  by-laws  pro- 
vided that  a  member  might  surrender  his  relief-fund  cer- 
tificate, and  a  new  certificate  would  be  issued  payable  to 
the  persons  directed,  and  a  member,  holding  a  certificate 
which  designated  his  daughter  as  beneficiary,  inserted,  on 
his  second  marriage,  after  his  daughter's  name,  "and  my 
wife,"  the  wife  acquired  no  title  to  any  part  of  the  pro- 
ceeds on  the  member's  death.^*  It  has  been  held  that, 
where  the  by-laws  reserve  to  members  the  power  to  change 
beneficiaries  at  will,  a  beneficiary  acquires  no  vested  inter- 
est in  the  fund.^* 

61  Wallace  v.  Madden  (1897)   168  111.  356,  48  N.  E.  181. 

62  Hanna  v.  Hanna  (1895)  10  Tex.  Civ.  App.  97,  30  S.  W.  820. 

63  Thomas  v.  Thomas  (1892)  131  N.  Y.  205,  30  N.  E.  61. 

64  Sabin  v.  Phinney  (1892)  134  N.  Y.  423,  31  N.  B.  1087;  Sofge  v.  Su- 
preme Lodge,  K.  of  H.  (1897)  98  Tenn.  446.  39  S.  W.  853;  Lane  v.  Lane 
(1897)  99  Tenn.  639,  42  S.  W.  1058. 

(Ill) 


§   95  BY-LAWS.  [Ch.  4 

By-laws  relating  to  benefits  and  loans. 

§  95.  Compliance  with  the  requirement  of  a  benefit 
society  that  a  member  claiming  sick  benefits  must  furnish 
a  statement  of  his  case  is  not  excused  by  his  insanity.^** 
And  where  the  by-laws  provide  that  no  sick  member  shall 
recover  benefits  without  producing  a  sworn  certificate  of 
a  physician,  the  fact  that  the  physician  who  attended  a 
sick  member  refused  to  give  a  sworn  statement  because  of 
conscientious  scruples  against  making  an  oath  does  not 
excuse  compliance.®^ 

A  by-law  of  a  building  and  loan  association  providing 
that  loans  shall  be  made  only  to  members  does  not  invali- 
date a  loan  which  a  member  and  an  outsider  jointly  obli- 
gate themselves  to  pay.®^  Where  the  by-laws  of  a  building 
association  provide  that  borrowers  from  it  "shall  secure 
the  payment  of  said  loans,  with  legal  interest,  by  satis- 
factory bond  or  mortgage  upon  real  estate,  the  officers  have 
authority  to  take  both  securities.®* 

Where  the  by-laws  provide  that  a  member  who  shall 
find  himself  incapable  of  working  by  reason  of  sickness  or 
accident  shall  receive  a  certain  benefit,  a  member  who  be- 
comes totally  blind  as  the  result  of  a  disease  produced  by 
an  accidental  injury  to  one  of  his  eyes  is  entitled  to  the 
benefit.®^     Under  a  by-law  providing  that  a  member  who 

65  Walsh  V.  Consumnes  Tribe,  No.  14,  I.  O.  R.  M.  (1895)  108  Cal.  496, 
41  Pac.  418. 

66  Audette  v.  L'Union  St.  Joseph  (Mass.;  1901)  59  N.  E.  668. 

67  People's  B.  &  L.  Ass'n  v.  Billing  (1895)  104  Mich.  186,  62  N.  W.  373. 

68  Juniata  B.  &  L.  Ass'n  v.  Hetzel  (1883)  103  Pa.  St.  507. 

69Moze  V.  Societe  de  Bienfaisance  St.  J.  B.  (1897)  167  Mass.  298,  45 
N.  E.  749. 
(112) 


Ch.    4]  CONSTRUCTION  OF  BY-LAWS.  §   95 

becomes  permanently  disabled  from  following]:  his  "usual 
or  some  other  occupation"  should  receive  a  certain  bene- 
fit, a  member  who  is  disabled  from  following  his  usual  em- 
ployment is  entitled  to  such  benefit,  though  he  is  not  dis- 
abled from  following  some  other  employment.^*^  But  a 
member  of  a  benefit  society  who  loses  the  fingers  of  one 
hand  cannot  recover  under  a  by-law  providing  for  pay- 
ment of  part  of  the  endowment  to  those  "who  shall  be- 
come permanently  and  totally  disabled  *  *  *  to  per- 
form or  direct  any  kind  of  labor  or  business."^^  Insanity 
is  a  sickness,  within  the  meaning  of  a  by-law  making  an 
allowance  for  sick  benefits/^  A  provision  in  the  by-laws 
of  a  benefit  society  that  a  member  obtaining  membership 
by  false  statements  as  to  his  age  shall  be  expelled,  and  for- 
feit all  benefits,  relates  to  proceedings  which  may  be  taken 
during  a  member's  lifetime,  and  does  not  prevent  the  bene- 
ficiary from  recovering  after  his  death.''*  A  by-law  allow- 
ing a  member  a  sick  benefit  of  five  dollars  "per  week  dur- 
ing thirteen  weeks  only  of  the  same  year"  refers  to  a  period 
of  a  year,  and  not  to  a  calendar  year.'* 

70  Neill  V.  Order  of  United  Friends  (1894)  78  Hun,  255,  28  N.  Y.  Supp. 
928. 

71  Supreme  Tent,  K.  of  M.,  t.  King  (1898)  79  111.  App.  145. 

72  Robillard  v.  Societe  St.  J.  B.  de  C.  (1898)  21  R.  I.  348.  43  Atl.  635. 
78  Supreme  Council  of  C.  B.  L.  v,  Boyle  (1894)  10  Ind.  App  soi,  37  n, 

B.  1105. 

»*  Thibeault  v.  St  Jean  Baptist  Ass'n  (1899)  21  R.  L  16T,  42  Atl.  518. 

(113) 
Boisot  By  Laws — 8. 


CHAPTER  V. 

EFFECT  OF  BY-LAWS. 

Oh  the  CJorpobatiow. 
i     96.     Application  to  corporation. 

97.  Same. 

98.  Rights  under  waiver  by  law. 

99.  Same. 

100.  Estoppel  to  urge. 

101.  Effect  of  violation. 

102.  Same — Not  ground  for  dissolution. 

On  the  Directors. 

§  103.     Right  to  waive. 

104.  Violation. 

105.  By-laws  regulating  powers. 

On  the  Officers. 

§  106.     Application  to  officers. 
107.     Effect  of  violation. 

On  the  Stockholders  or  Members. 
§  108.    Application  to  stockholders  and  members. 


109. 

Same. 

110. 

Same. 

111. 

Waiver. 

112. 

Estoppel  to  attack. 

113. 

Same. 

114. 

Eiffect  of  violation. 

115. 

Same. 

116. 

Conduct  of  meetings. 

117. 

Transfer  of  stock. 

(114) 

Ch    5j  EFFECT  OF  BY-LAWS.  g  % 

118.  Changes  in  oy-laws. 

119  Samie — Changes  held  valid. 

120.  Same — Changes  held  invalid. 

121.  Same — By-laws  as  part  of  member's  contract. 

122.  Same — Reservation  of  right  to  amend. 

123.  Same — Lawful  and  reasonable  amendments  only. 

124.  Same — Impairment  of  contract  not  allowed. 

125.  Same — Membership  rights  and  insurance  rights  distinguished. 

126.  Same — Reservations  upheld. 

127.  Same — Slight  changes. 

128.  Same — Vested  rights. 

129.  Same — What  are  vested  rights. 

130.  Same — Same. 

131.  Same — Acquiescence  and  beneficial  alterations. 

On  Third  Persons. 

§  132.  Not  binding  on  strangers. 

133.  Illustrations. 

134.  Implied  assent  suflacient. 

135.  Who  is  stranger. 

136.  What  is  implied  notice. 

137.  Limitations  of  power  of  officers. 

138.  The  rule  in  New  York. 

139.  The  rule  in  Massachusetts — Bona  fide  dealers  not  affected. 

140.  The  rule  in  Illinois — Same. 

141.  Assignment  of  shares  contrary  to  by-law. 

142.  Rights  of  creditors. 

143.  Rights  of  third  persons  under  by-laws. 

144.  Right  to  attack  by-laws. 

145.  Beneficiary  bound  by  by-law, 

146.  Involuntary  relation  to  corporation. 

On  f  he  Corporatiow, 
Application  to  corporation. 

§  96.     As  a  general  rule,  the  corporation  itself  is  sub- 

(115) 


§  97  BY-LAWS.  ("Ch.  5 

ject  to  the  restrictions  contained  in  its  by-laws,*  and  is  en- 
titled to  rely  upon  such  by-laws  in  its  dealings  with  its 
members  and  with  third  persons".  Thus,  it  has  been  held 
that  a  transfer  of  stock  not  entered  on  the  books  of  the 
corporation  in  accordance  with  its  by-laws  is  invalid  as 
against  the  corporation.^  And  where  the  authority  of  the 
officers  is  defined  by  the  by-laws,  acts  of  such  officers  in  ex- 
cess of  the  powers  conferred  by  the  by-laws  do  not,  in  the 
absence  of  ratification,  bind  the  corporation.^ 

Same. 

§  97.  A  savings  bank  is  liable  to  its  depositors  for 
money  paid  out  on  forged  orders  not  properly  witnessed 
as  required  by  the  by-laws,  since  the  depositors  have  a 
right  to  rely  on  the  published  by-laws  as  to  the  mode  in 
which  money  can  be  withdrawn.*  And  under  by-laws  pro- 
viding that  a  new  member  must  be  approved  by  a  vote  of 
the  society,  and  that  the  object  for  which  a  special  meet- 
ing is  called  must  be  stated,  members  cannot  be  admitted 
at  a  special  meeting  held  under  a  call  which  contained  no 
article  for  the  admission  of  members.^  Where  the  by-laws 
provide  for  the  imposition  of  a  specified  fine  for  a  certain 
violation  of  the  by-laws,  the  society  has  no  authority  to  im- 

1  Covenant  Mut.  Ben.  Ass'n  v.  Spies  (1885)  114  111.  463,  468,  2  N.  B. 
482. 

2  Stockwell  v.  St.  Louis  Mercantile  Co.  (1880)  9  Mo.  App.  133. 
«  Adriance  v.  Roome  (1868)  52  Barb.  (N.  Y.)  411. 

4  People's  Sav.  Bank  v.  Cupps  (1879)  91  Pa.  St.  315. 
B  Gray  v.  Christian  Society  (1884)  137  Mass.  331. 

(116) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §   98 

pose  a  larger  fine.®  Of  course  a  corporation  is  iield  to  a 
strict  observance  of  all  the  formalities  prescribed  by  the 
by-laws  in  the  infliction  of  penalties  and  forfeitures.'^ 
Where  an  officer  of  a  corporation  receives  money  contrary 
to  the  by-laws,  and  embezzles  the  same,  the  corporation 
cannot  recover  therefor  on  a  bond  given  by  him  condi- 
tioned for  his  accounting  for  all  money  received  by  him, 
since  the  corporation  is  bound  by  the  by-law.^ 

Eights  under  waiver  by  law. 

§  98.  A  corporation  cannot  assert  rights  under  a  by- 
law which  it  has  waived.  Thus,  where  a  by-law  declaring 
a  lien  on  the  stock  directs  that  the  certificates  of  stock 
shall  contain  notice  of  such  provision,  the  corporation  can- 
not assert  such  lien  as  against  purchasers  of  stock,  where 
the  certificates  contain  no  such  notice,^  And  where  a  by- 
law requires  the  consent  of  the  directors  to  a  transfer  of 
stock  by  a  stockholder  who  is  indebted  to  the  company,  but 
in  the  practice  of  the  company  such  cases  were  never 
brought  before  the  board,  a  transfer  by  such  stockholder^ 
made  without  such  consent,  but  in  the  presence  of  the  sec- 
retary, according  to  the  usage  of  the  company,  is  good  as 
against  the  company.^** 

«Meurer  v.  Detroit  Musicians  B.  &  P.  Ass'n  (1893)  95  Mich.  451,  54 
N.  W.  954. 

7  Supreme  Lodge,  K.  of  H.,  v.  Dalberg  (1891)  138  111.  508,  28  N.  E. 
785;  Wachtel  v.  Noah  W.  &  O.  Benev.  Soc.  (1881)  84  N.  Y.  28;  Davis  v. 
Atkinson  (1900)  67  N.  Y.  Supp.  851.     And  see  post,  c.  6. 

8  Sperry  v.  Dransfleld  (1884)  2  New  Zealand  (Sup.  Ct.)  319. 
•  Bank  of  Holly  Springs  v.  Pinson  (1880)  58  Miss.  438. 

10  Chambersburg  Ins.  Co.  v.  Smith  (1849)  11  Pa.  St.  120. 

(117) 


§  99  BY  LAWS.  [Ch.  5 

Where  an  assessment  was  paid  in  accordance  with  a 
certain  method  sanctioned  by  the  lodj];e,  but  different  from 
tliat  prescribed  by  the  by-laws,  the  association  is  estopped 
from  declaring  a  forfeiture.^^ 

Same. 

§  99.  So,  too,  a  policy  of  insurance  issued  by  a  mutual 
insurance  company  in  a  case  where  insurance  is  forbidden 
by  the  by-laws  is  not  invalid,  since  the  issue  of  the  policy 
is  a  waiver  of  the  by-law.^^  Where  by-laws  which  have  been 
made  by  the  directors,  and  which  the  directors  are  there- 
fore competent  to  waive,  prescribe  what  notice  must  be 
given  for  meetings  of  the  directors,  a  contract  entered  into 
by  the  directors  in  behalf  of  the  corporation  at  a  meeting 
of  which  no  such  notice  has  been  given  is  not  invalid,  since 
the  action  of  the  directors  in  entering  into  a  contract  at 
such  a  meeting  would,  so  far  as  the  other  party  to  the  con- 
tract is  concerned,  constitute  a  waiver  of  the  by-law.^^ 
And  a  by-law  requiring  the  clerk  of  the  corporation  to  be 
sworn  does  not  authorize  the  corporation,  when  sued  for 
dividends,  to  set  up  in  defense  that  the  clerk  who  executed 

"National  Gross  Loge  t.  Jung  (1896)  65  111.  App.  313.  See,  also, 
Plquenard  v.  Libby  (1879)  7  Mo.  App.  564;  Patrons'  Mut.  Aid  Soc.  v. 
Hall  (1898)  19  Ind.  App.  118,  49  N.  E.  279. 

12  Campbell  v.  Merchants'  &  Farmers'  Mut.  Fire  Ins.  Co.  (1858)  37  N. 
H.  41. 

IS  Samuel  v.  Holladay  (1869)  1  Woolw.  400,  Fed.  Cas.  No.  12,288,  1 
Am.  Corp.  Cas.  139;  Samuels  v.  Holliday  (1868)  McCahon  (Kan.)  214. 
A  contrary  conclusion  was  reached  in  a  California  case,  in  which  it 
did  not  appear  who  adopted  the  by-law.  Smith  v.  Dorn  (1892)  96  Cal. 
73,  30  Pac.  1024,  5  Nat.  Corp.  Rep.  150. 
(118) 


(Jll.  5]  EFFECT  OF  BY-LAWS.  §  100 

the  instrument  under  which  the  plaintiff  claims  title  to  his 
shares  of  stock  was  not  sworn.^* 

Where  the  by-laws  of  an  unincorporated  benefit  associa- 
tion provide  that,  if  the  dues  of  its  members  should  fall  be- 
low a  certain  sum  per  month  for  three  successive  months, 
it  should  be  disbanded,  that  contingency  does  not  ipso 
facto  terminate  the  association,  since  the  by-law  may  be 
waived.^  ^ 

Estoppel  to  urge. 

§  100.  A  corporation  cannot  escape  liability  upon  exe- 
cuted contracts  by  virtue  of  its  own  by-laws.  Thus,  where 
a  corporation  has  received  the  benefit  of  services,  it  cannot 
repudiate  its  indebtedness  therefor  on  the  .s^round  that  its 
by-laws  do  not  pejrmit  it  to  run  in  debt  without  the  order 
of  its  directors,^®  or  that  the  contract  was  made  by  one  offi- 
cer, while  the  by-laws  directed  it  to  be  made  by  another.^^ 
And  the  by-law  of  a  manufacturing  corporation  limiting 
the  purchasing  power  of  the  officers  does  not  invalidate  an 
executed  purchase  in  excess  of  such  limitation,  where  the 
seller  had  no  notice  of  the  by-law.^*  A  by-law  of  a  savings 
bank  that  deposits  may  be  paid  to  any  one  presenting  the 
■pass-book  does  not,  though  assented  to  by  the  depositors, 
relieve  the  bank  from  the  duty  of  exercising  reasonable 
care.^^ 

14  Hastings  v.  Blue  Hill  Turnpike  Corp.  (1829)  9  Pick.  (Mass.)  82. 
iBAtnip  V.  Tennessee  Mfg.  Co.  (Tenn.  Ch.  App.;  1898)  52  S.  W.  1093. 

16  Donovan  v    Halsey  Fire  Engine  Co.  (1885)   58  Mich.  38. 

17  Smith  V.  Martin  Anti-Fire  Car  Heater  Co.  (1892)  19  N.  Y.  Supp.  285. 

18  Ten  Broek  v.  Winn  Boiler  Compound  Co.  (1885)  20  Mo.  App.  19. 

i»  Kimball  v.  Norton  (1879)  59  N.  H.  1;  Appleby  v.  Erie  County  Sav- 

(119) 


§  101  BY-LAWS.  [Ch.  5 

Effect  of  violation. 

§  101.  By-laws  of  a  corporation  as  to  periodical  ex- 
aminations of  its  business  by  the  directors  are  for  its  own 
security  only,  and  the  failure  of  the  company  to  enforce 
such  by-laws  does  not  discharge  the  sureties  upon  the 
bonds  of  its  officers.^*^  For  the  same  reason,  the  neglect  by 
its  officers  in  a  single  instance  to  obey  a  by-law  which  di- 
rects cancellation  of  all  certificates  of  stock  surrendered 
for  transfer  before  issuing  new  certificates  is  not  such 
negligence  as  will  render  a  corporation  liable,  at  the  suit 
of  an  innocent  third  party,  for  the  value  of  certificates 
which  should  have  been  canceled,  but  which  were  fraudu- 
lently pledged  to  such  party  by  the  manager  of  the  corpora- 
tion as  security  for  a  loan  made  to  himself  personally.^^ 

Where  the  by-laws  require  the  corporate  meetings  to  be 
held  at  the  corporation's  counting  room,  and  it  appears 
that  a  meeting  was  held  at  the  dwelling  house  of  its  gen- 
eral agent,  it  will  be  presumed,  in  the  absence  of  evidence 
to  the  contrary,  that  the  counting  room  was  for  the  time 
being  at  that  place.^^  If  a  corporation  refuses  to  grant  to 
a  member  any  benefits  that  have  been  secured  to  him  by  its 

ings  Bank  (1875)  62  N.  Y.  17;  Kummel  v.  Germania  Savings  Bank 
(1891)  127  N.  Y.  488,  28  N.  E.  398;  Wall  v.  Emigrant  Industrial  Sav- 
ings Bank  (1892)  19  N.  Y.  Supp.  194. 

20  State  V.  Atherton  (1867)  40  Mo.  209;  Morris  Canal  &  Banking  Co. 
V.  Van  Vorst  (1847)  21  N.  J.  Law,  100. 

21  Knox  V.  Eden  Musee  American  Co.  (1896)  148  N.  Y.  441,  42  H.  E. 
988. 

22  McDaniels  v.  Flower  Brook  Mfg.  Co.   (1850)   22  Vt.  274. 
(120) 


Ch.  Sj  EFFECT  OF  BY-LAWS.  §   102 

by-laws,  the  member  lias  a  riglit  of  action  against  tlie  cor- 
poration therefor  f^  and  a  corporation  has  no  right  to  pun- 
ish a  member  for  acts  which,  under  the  by-laws,  are  not 
punishable.2* 

Same — Not  ground  for  dissolution. 

§  102.  Where  the  statute  under  which  a  corporation  is 
organized  provides  that  the  directors  shall  be  annually 
elected  by  the  stockholders  at  such  time  and  place  and 
upon  such  notice  as  shall  be  directed  by  the  by-laws,  an 
annual  meeting  cannot  be  held  except  by  unanimous  con- 
sent until  notice  of  such  meeting  is  given  according  to  the 
by-laws.^*^  The  act  of  an  association  in  deposing  its  presi- 
dent in  a  manner  contrary  to  the  by-laws,  although  illegal, 
is  not  a  ground  for  decreeing  the  dissolution  of  the  cor- 
poration, where  the  president  himself  acquiesces  at  the 
time  in  the  act  of  the  association.^^  A  by-law  of  a  cor- 
poration providing  that  it  shall  be  dissolved  on  a  certain 
day  puts  an  end  to  it  on  that  day ;  its  continuance  is  merely 
permissive,  but  it  is  subject  to  the  same  rules  so  long  as 
the  stockholders  continue  to  act.^'^  It  has  been  held  that, 
in  an  action  where  a  loan  made  by  a  corporation  would  be 
usurious  unless  the  corporation  were  a  building  and  loan 
association,  the  by-laws  are  admissible  in  evidence  against 

23Dolan  V.  Court  of  Good  Samaritan  (1880)   128  Mass.  437. 
2*  People  V.  American  Institute  (1873)  44  How.  Pr.  (N.  Y.)  468. 
25  San  Buenaventura  Mfg.  Co.  v.  Vassault  (1875)  50  Cal.  537. 
20  Industrial  Trust  Co.  v.  Green  (1892)  17  R.  I.  586,  23  Atl.  914. 
27  Merchants'  &  Planters'  Line  v.  Waganer  (1882)  71  Ala.  581,  10  Am, 
Corp.  Cas.  12. 

(121) 


§   104  BY-LAWS.  j-Ch.    5 

the  corporation  to  show  that  its  business  was  not  that  of  a 
building  and  loan  association.^* 

On  the  DlRECTOBS. 

Right  to  waive. 

§  103.  Directors  are,  of  course,  presumed  to  be  cog- 
nizant of  the  by-laws.^^  But  in  considering  the  effect  of 
by-laws  upon  directors,  there  is  an  important  distinction 
to  be  made  between  by-laws  adopted  by  the  stockholders 
and  by-laws  adopted  by  the  directors  themselves.  When 
by-laws  are  adopted  by  stockholders,  they  are  binding 
upon  the  directors  in  the  same  way  that  the  charter  and 
the  statutes  are.  The  directors  have  no  more  power  to 
modify  or  waive  them  than  they  have  to  modify  or  waive 
the  provisions  of  the  charter  or  of  the  statutes ;  but  where 
the  by-laws  have  been  made  by  the  directors,  they  are  bind- 
ing upon  the  directors  to  no  greater  extent  than  an  act  of 
the  legislature  is  binding  upon  a  subsequent  legislature. 
The  power  that  made  can  also  repeal.  A  by-law  made  by 
the  directors  may  be  waived  by  them.^® 
Violation. 

§  104.  Where,  however,  the  directors  violate  a  by-law 
made  by  the  stockholders,  they  are  responsible  to  the  cor- 
poration therefor.  Thus,  where  the  directors  of  a  build- 
ing and  loan  association  make  loans  in  violation  of  the  by- 

28  White  V.  Interstate  B.  &  L.  Ass'n  (1898)  106  Ga.  146,  32  S.  E.  26. 

29  Mutual  Life  Ins.  Co.  v.  McSherry  (1887)  68  Md.  41.  11  Atl.  577. 

30  Campbell  v.  Merchants'  &  Farmers'  Mut.  Fire  Ins.  Co.  (1858)  37 
N.  H.  41. 

(122) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  105 

laws,  they  are  liable  to  the  association  for  any  loss  there- 
by caused.^^  Where  directors  meet  at  a  place  other  than 
that  designated  in  the  by-laws,  to  elect  a  president,  such 
election  is  void.^^  It  has  been  held  that  a  by-law  of  an  in- 
surance company  which  provides  that  a  special  meeting 
of  the  company  shall  be  called  by  the  president,  or,  in  his 
absence,  by  the  secretary,  on  application  made  in  writing 
by  ten  members,  does  not  by  implication  preclude  the  di- 
rectors from  calling  special  meetings  without  such  appli- 
cation.^^ But  where  the  by-laws  provide  that  all  meetings 
of  the  directors  shall  be  specially  called,  a  meeting  of  a 
part,  although  a  majority,  of  the  members  of  the  board  of 
directors,  not  called  in  pursuance  of  the  by-laws,  is  not  a 
le^al  meeting.^* 

By-laws  regulating  powers. 

§  105.  Where  the  by-laws  of  a  mutual  benefit  insurance 
company  provide  that  assessments  shall  be  levied  by  the 
board  of  directors,  the  board  cannot  delegate  that  power 
to  the  president  and  secretary.'^  Under  a  by-law  attach- 
ed to  an  insurance  policy  authorizing  the  directors  to  re- 
ceive, as  a  member,  an  assignee  thereof,  on  his  giving  a  new 

31  Citizens'  Building  Ass'n  v.  Coriell  (1881)  34  N.  J.  Eq.  383. 

32  Waterman  v.  Chicago  &  I.  R.  Co.  (1892)  139  111.  658,  29  N.  E.  689. 
83  Citizens'  Mut.  Fire  Ins.  Co.  v.  Sortwell  (1864)  8  Allen  (Mass.)  217. 

But  see  Smith  v.  Dorn  (1892)  96  Cal.  73,  30  Pac.  1024,  5  Nat.  Corp, 
Rep.  150. 

34  ]\iast  Buggy  Co.  v.  Litchfield  F.  H.  &  L  Co.  (1893)  55  111.  App.  98. 

35  Garretson  v.  Equitable  Mut.  L.  &  E.  Ass'n  (1895)  93  Iowa,  402,  61 
N.  W.  952. 

(123) 


§  106  BY-LAWS.  [Ch.  5 

note,  no  acts  or  declarations  of  the  directors  tending  to 
create  a  membership  without  taking  a  new  note  can  oper- 
ate as  an  estoppel  against  the  company.^^  Where  a  by- 
law provides  that  any  person  chosen  a  director  should 
cease  to  be  one  when  he  ceased  to  be  a  proprietor,  this,  by 
implication,  renders  any  one  not  a  proprietor  ineligible 
to  the  office.^^ 

On  the  Officbbs. 

Application  to  officers. 

§  106.  By-laws  of  a  corporation  are  binding  upon  its 
officers,  even  though  such  officers  are  not  members  of  the 
corporation.^^  The  reason  is  that  the  officers  are  presum- 
ed to  have  access  to  the  records  of  the  corporation,  and 
therefore  to  be  fully  advised  in  regard  to  its  by-laws. 
Having  this  notice  of  the  by-laws,  their  acceptance  of  office 
implies  an  assent  to  them.  The  enumeration  in  the  by- 
laws of  certain  specified  powers  bestowed  upon  the  offi- 
cers does  not,  at  least  so  far  as  third  persons  are  con- 
cerned, forbid  the  officers  from  binding  the  corporation 
by  acts  which,  though  not  within  the  enumerated  powers, 
are  within  the  authority  which  the  titles  of  the  officers 

30  Cannon  v.  Farmers'  Mut.  Fire  Ass'n  (1899)  58  N.  J.  Eq.  102,  43  Atl. 
281. 

87  Despatch  Line  of  Packets  v.  Bellamy  Mfg.  Co.  (1841)  12  N.  H.  205. 

38  Bank  of  Wilmington  v.  Wollaston  (1840)  3  Harr.  (Del.)  90;  Hunter 
V.  Sun  Mut.  Ins.  Co.    (1874)   26  La.  Ann.  13;   Ellis  v.  North  Carolina 
Inst,  for  Deaf,  Dumb  &  Blind  (1873)  68  N.  C.  423,  5  Am.  Corp.  Cas.  59L 
And  see  Jones  v.  Vance  Shoe  Co.  (1900)  92  111.  App.  158. 
(124) 


Ch.    5]  EFFECT  OF  BY-LAWS.  §   107 

usually  imply.'®  Thus  in  a  case  in  Illinois  it  appeared 
that  a  deed  purporting  to  convey  land  from  a  railroad 
company  was  executed  by  its  president  alone,  while  the  by- 
laws required  that  all  deeds  should  be  countersigned  by 
the  secretary.  The  court  held  that  the  deed  was  good, 
saying:  "By-laws  are  private,  and  only  accessible  to  the 
officers  of  the  company.  Strangers  to  the  company  can- 
not be  bound  by  the  rules  adopted  for  the  government  of 
the  company.  The  charter  did  not  require  the  deed  to  be 
attested  by  the  secretary,  and  persons  not  officers  of  the 
company  cannot  be  required  to  know  the  provisions  of 
their  by-laws. "**• 

Effect  of  violation. 

§  107.  Where  the  by-laws  provide  that  meetings  of 
stockholders  shall  be  called  by  the  directors,  the  president 
cannot,  without  the  action  of  the  board,  call  such  a  meet- 
ing.*^ Where  the  by-laws  of  a  bank  forbid  loans  to  be 
made  without  the  approbation  of  the  finance  committee, 
and  the  president  makes  a  loan  without  submitting  it  to 
the  committee,  he  is  responsible  to  the  bank  for  any  loss 
that  may  result  from  such  loan.*^  Officers  empowered  to 
purchase  property  may  contract  for  payment,  notwith- 
standing a  by-law  forbidding  the  contracting  of  any  debt 

«>Fay  V.  Noble  (1853)  12  Cush.  (Mass.)  1;  Smith  v.  Martin  Anti-Fire 
Car  Heater  Co.  (1892)  19  N.  Y.  Supp.  285;  Arapahoe  C.  &  L.  Co.  v.  Stev- 
ens (1889)  13  Colo,  540,  22  Pac.  825. 

*o  Smith  V.  Smith  (1872)  62  111.  496. 

*i  State  V.  Pettineli  (1875)  10  Nev.  141. 

«3  Oakland  Bank  v.  Wilcox  (1882)  60  Ca).  140. 

(125) 


§  1C3  BY-LAW3.  [Ch.    5 

except  by  order  of  the  board  of  directors.**  Where  the 
by-laws  of  a  building  association  required  dues  and  assess- 
ments to  be  paid  to  the  secretary  at  weekly  meetings,  and 
also  required  him  to  give  bond  for  the  faithful  perform- 
ance of  his  duties,  such  bond  covers  all  money  received  by 
him  in  his  official  capacity,  whether  paid  at  the  times  re- 
quired or  not.^* 

OlT  THE  StOCKHOLDEBS  OB  MemBEBS. 

Application  to  stockholders  and  members. 

§  108.  Stockholders  and  members  of  a  corporation  are, 
of  course,  bound  by  the  by-laws.*''  They  are  bound  by  vir- 
tue of  their  assent  to  the  by-laws.*°  Sometimes  such  assent 
is  express,  as  in  cases  where  each  member  signs  the  by- 
laws, or  where  he  signs  a  contract  with  the  corporation 
by  which  he  agrees  to  become  bound  by  the  by-laws.  But 
even  where  there  is  no  such  express  assent,  the  mere  act 
of  joining  the  corporation,  or  of  purchasing  stock  therein, 
is  a  constructive  assent  to  the  legal  by-laws  of  the  corpora- 
tion.*'    The  consideration  of  such  asc;ent  is  the  privilege 

43  Arapahoe  C.  &  L.  Co.  v.  Stevens  (1889)  13  Colo.  534,  22  Pac.  823. 

**  Tyler  v.  Old  Post  Bldg.  Ass'n  (1882)   87  Ind.  323. 

«  Covenant  Mut.  Ben.  Ass'n  v.  Spies  (1885)  114  111.  463,  468.  2  N.  E. 
482;  Espy  v.  American  Legion  of  Honor  (1893)  7  Kulp  (Pa.)  134. 

*6  state  V.  Overton  (1854)  24  N.  J.  Law,  440,  61  Am.  Dec.  675;  Morgan 
V.  Ban'.:  of  North  America  (1822)  8  Serg.  &  R.  (Pa.)  88,  11  Am.  Dec. 
575;  Thomas  v.  Musical  Mut.  Protective  Union  (1890)  121  N.  Y.  45,  56, 
24  N.  E.  24. 

47  Anacosta  Tribe  v.  Murbach  (1858)  13  Md.  94;  Baur  v.  Samson 
Lodge  (1885)  102  Ind.  267;  Sassenscheidt  v.  Fresco  Painters'  Ben. 
anion  (1875)  1  City  Ct.  Rep.  (N.  Y.)  9;  Tattle  v.  Walton  (1846)  1  Ga. 
(126)  ' 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  109 

of  becoming  a  member  of  the  association.*®  It  is 
not  even  necessary  to  show  that  the  stockholders 
or  members  have  actual  knowledge  of  the  by-laws,  since 
they  are  chargeable  with  notice  of  them  from  the  mere 
fact  of  their  connection  with  the  corporation.*®  Thus, 
a  bank  stockholder  who  borrows  money  from  the  bank  is 
chargeable  with  notice  of  a  by-law  forbidding  the  transfer 
of  stock  by  those  indebted  to  the  bank,^'' 

§  109.  By-laws  within  the  scope  of  the  charter  are  as 
binding  on  the  members  of  the  corporation  as  the  pro- 
visions of  the  charter  itself.**  So,  where  a  certificate  of 
stock  recited  that  it  was  subject  to  the  constitution  and 
the  by-laws,  representations  of  an  agent  of  the  company  in 
conflict  therewith  do  not  estop  the  corporation.^^    And  a 

49;  Came  v.  Brigham  (1854)  39  Me.  38;  McFaddon  v.  County  of  Los 
Angeles  (1888)  74  Cal.  571;  Crittenden  v.  Southern  Home  B.  &  L.  Ass'n 
(1900)  111  Ga.  266,  36  S.  E.  643;  Smith  v.  Pinney  (1891)  86  Mich.  484, 
49  N.  W.  305;  People's  B.,  L.  &  S.  Ass'n  v.  Tinsley  (1898)  96  Va.  322,  31 
S.  E.  508;  Paton  v.  Newman  (1899)  51  La.  Ann.  1428,  26  So.  576;  Man- 
del  V.  Swan  L.  &  C.  Co.  (1893)  51  111.  App.  204;  Beach  v.  Co-operative 
S.  &  L.  Ass'n  (1898)  10  S.  D.  549,  74  N.  W.  889. 

48  Palmetto  Lodge  v.  Hubbell  (1848)  2  Strob.  (S.  C.)  457,  49  Am. 
Dec,  604. 

*»Baur  V.  Samson  Lodge  (1885)  102  Ind.  267;  Tuttle  v.  Walton  (1846) 
1  Ga.  49. 

60  Tete  y.  Fanners'  &  Mechanics'  Bank  (1869)  4  Brewst.  (Pa.)  308. 

«i  Jackson  v.  South  Omaha  Lire  Stock  Exchange  (1896)  49  Neb. 
«87,  08  N.  W.  1031. 

«»  Interstate  B.  &  L-  Ass'n  r.  Hunter  (Tex.  Civ.  App.;  1899)  51  S.  W. 

(127) 


§   109  BY-LAWS.  [Ch.  5 

member  induced  to  join  by  an  erroneous  publication  of  tbe 
by-laws  is  nevertheless  limited  to  rij^Iits  existing  under  ac- 
tual by-laws.^^  But  it  has  been  held  that  a  person  joining  an 
association  may  treat  the  by-laws  as  contained  in  a  copy 
given  him  when  he  joins  as  the  entire  code  of  by-laws  of 
the  association,  and  is  not  bound  by  a  by-law,  of  which  he 
has  no  notice,  not  included  in  such  copy.^*  Members  of 
voluntary  unincorporated  associations  are  bound  by  the 
by-laws  thereof,  whether  they  are  reasonable  or  not,  so 
long  as  they  are  not  illegal  or  contrary  to  public  policy.^^ 
A  member  of  a  benefit  society,  who  agrees  to  be  bound  by 
by-laws  enacted  by  a  supreme  lodge,  is  not  bound  by  by- 
laws enacted  by  a  board  of  control.^^  And  where  the  con- 
stitution of  the  local  branch  of  a  benefit  society,  forming 
part  of  the  member's  contract,  contains  no  requirement 
that  the  by-laws  of  the  subordinate  societies  must  conform 
to  those  of  the  association,  which  has  no  direct  transactions 
with  members,  the  by-laws  of  the  subordinate  societies  gov- 
ern in  case  of  conflict.'^'^  It  has  been  held  that,  where  the 
articles  of  association  of  a  building  and  loan  association 
contained  in  the  pass-book  of  a  member,  to  the  terms  of 

osHirsch  v.  United  States  Grand  Lodge,  O.  of  B.  A.  (1894)  56  Mo. 
App.  101. 

54McKenney  v.  Diamond  State  Loan  Ass'n  (1889)  8  Houst.  (Del.) 
557,  18  Atl.  905. 

55  Conniff  v.   Jamour    (1900)    31     Misc.  Rep.  729,  65  N.  Y.  Supp.  317. 

56  Supreme  Lodge,  K.  of  P.,  v.  Kutscher  (1899)  179  111.  340,  53  N. 
E.  620;  Supreme  Lodge,  K.  of  P.,  v.  McLennan  (1898)  171  111.  417,  49 
N.  E.  530. 

67  Polish  R.  C.  Union  v.  Warczak  (1899)  182  111.  27,  55  N.  E.  64. 

(128) 


Ch.  5]  EFP^ECT  OF  BY-LAWS.  §   HQ 

which  he  has  assented,  contain  no  provision  for  their 
amendment,  amended  articles  subsequently  adopted  are 
not  binding  upon  such  member  by  force  of  their  adoption 
alone."** 

Same. 

§  110.  A  person  who  becomes  insured  in  a  mutual  in- 
surance company  becomes  a  member  of  the  company,  and 
is  bound  by  the  by-laws  of  the  company,  and  is  chargeable 
with  notice  of  them.^® 

A  stockholder  who  has  taken  part  in  adopting  by-laws, 
has  acted  and  acquired  rights  under  them,  and  has  allowed 
third  parties  to  acquire  rights  under  them,  is  estopped 
from  denying  that  the  by-laws  were  legally  adopted.^"  And 
a  member  of  a  mutual  insurance  company  cannot  question 
the  validity  of  the  by-laws  under  which  he  became  a  mem- 
ber, on  the  ground  that  they  were  not  legally  adopted.®* 

08  Krakowski  v.  North  New  York  B.  &  L.  Ass'n  (1894)  7  Misc.  Rep. 
188,  27  N.  Y.  Supp.  314. 

sopfister  V.  Gerwig  (1890)  122  Ind.  567,  23  N.  B.  1041;  Treadway  v. 
Hamilton  Mut.  Ins.  Co.  (1860)  29  Conn.  68;  Susquehanna  Ins.  Co.  v. 
Perrlne  (1844)  7  Watts  &  S.  (Pa.)  348;  Amesbury  v.  Bowditch  Mut. 
Fire  Ins.  Co.  (1856)  6  Gray  (Mass.)  602;  Simeral  v.  Dubuque  Mut  Fire 
Ins.  Co.  (1865)  18  Iowa,  319;  Coles  v.  Iowa  State  Mut.  Ins.  Co.  (1865) 
18  Iowa,  425;  Mitchell  v.  Lycoming  Mut.  Ins,  Co.  (1865)  51  Pa.  St  402; 
Raggett  V.  Bishop  (1826)  2  Car.  &  P.  343;  Emmons  v.  Hope  Lodge  No. 
21,  L  O.  O.  F.  (1893)  1  Marv.  187,  40  Atl.  956;  Fitzgerald  v.  Metropoli- 
tan Ace.  Ass'n  (1898)  106  Iowa,  457,  76  N.  W.  809;  Willison  v.  Jewelers' 
&  Tradesmen's  Co.  (1899)  61  N.  Y.  Supp.  1125. 

60  People  V.  Sterling  B.  C.  Mfg.  Co.  (1876)  82  111.  461;  Cheney  v. 
Ketcham  (1898)  7  Ohio  Dec.  183,  5  Ohio  N.  P.  139.  See  Kent  v.  Quick- 
silver Mining  Co.   (1879)  78  N.  Y.  179. 

eiPfister  v.  Gerwig  (1890)  122  Ind.  567,  23  N.  E.  1041. 

(129) 
Bolsot  By  Laws — 9. 


§   112  BY-LAWS.  [Ch.   5 

Every  stockholder  of  a  banking  corporation  who  draws 
or  indorses  a  note  to  procure  a  loan  from  the  bank  is  bound 
to  know  the  terms  of  the  by-laws  in  regard  to  the  right  of 
the  bank  to  a  lien  upon  the  stock  to  secure  such  debt*'^ 

Waiver. 

§  111.  Where  a  mutual  benefit  society  issues  a  policy, 
the  terms  of  which  are  in  conflict  with  the  by-laws  of  the 
society,  the  members'  rights  under  the  policy  are  measured 
by  the  policy  itself,  and  not  by  the  by-laws,  since  issuing 
the  policy  is  a  waiver  of  the  by-laws.®^  Where  the  by-laws 
©ran  incorporated  stock  exchange  define  the  rights  and 
powers  of  its  members,  the  members  cannot  assert  any 
rights  in  the  corporation  in  excess  of  those  named  in  the 
by-laws.®* 

Estoppel  to  attack. 

§  112.  A  member  cannot  object  to  the  enforcement  of 
the  by-laws  against  him  on  the  ground  that  they  were  not 
properly  adopted,  where  it  appears  that  they  have  been 

«2  Brent  v.  Bank  of  Washington  (1836)  10  Pet.  (U.  S.)  614. 

63  Davidson  v.  Old  People's  Mut.  Ben.  Soc.  (1888)  39  Minn.  303,  39  N. 
W.  803;  Union  Mut.  Fire  Ins.  Co.  v.  Keyser  (1855)  32  N.  H.  313,  64  Am. 
Dec.  375;  Campbell  v.  Merchants'  &  Farmers'  M.  &  F.  Ins.  Co.  (1858)  37 
N.  H.  41;  McCoy  v.  Northwestern  Mut.  Relief  Ass'n  (1896)  92  Wis. 
577;  Sovereign  Camp,  Woodmen  of  the  World,  v.  Fraley  (Tex.;  1900) 
59  S.  W.  879.  But  see  Steuve  v.  Grand  Lodge,  A.  O.  U.  W.  (1891)  5 
Ohio  Cir.  Ct.  Rep.  471;  Williamson  v.  Eastern  B.  &  L.  Ass'n  (1899)  54 
S.  C.  582,  32  S.  E.  765;  Welling  v.  Eastern  B.  &  L.  Ass'n  (1899)  56  S. 
C.  280,  34  S.  E.  409;  International  B.  &  L.  Ass'n  v.  Abbott  (1892)  85 
Tex.  220,  20  S.  W.  118.  ' 

«4  Belton  V.  Hatch  (1888)  109  N.  Y.  593. 
(130) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  112 

recorded,  acted  upon,  and  enforced  as  the  by-laws  of  the 
corporation.®'^  But  where  by-laws  are  for  any  reason  il- 
legal, it  will  not  be  presumed  that  the  stockholders  have 
assented  to  them,  and,  even  if  they  have  expressly  assented 
to  them,  they  are  not  bound  by  such  illegal  by-laws.®^ 
Thus,  a  member  cannot  be  deprived  of  his  membership  by 
an  illegal  by-law,  even  though  he  has  assented  to  it;*'^  nor 
is  he  bound  by  a  by-law  requiring  the  consent  of  all  stock- 
holders to  a  transfer  of  stock,  even  though  he  has  assented 
to  it.®*  Even  though  he  fails  to  object  to  an  illegal  by-law 
until  an  attempt  is  made  to  enforce  the  same  against  him, 
he  is  not  estopped  from  disputing  its  validity,  and  may  en- 
join the  corporation  from  enforcing  it,  where  it  appears 
that  he  did  not  take  any  part  in  enacting  the  by-law,  and 
that  other  persons  have  not  been  misled  by  his  omission  to 
protest  against  it.®*  And  the  fact  that  members  of  an  as- 
sociation voluntarily  assumed  its  obligation  in  the  first  in- 
stance does  not  make  legal  a  by-law  which,  by  fine  or  penal- 
ty, compels  them  to  act  in  concert  in  withdrawing  their 

65  State  V.  Curtis  (1874)  9  Nev.  335. 

66  In  re  Klaus  (1886)  67  Wis.  401;  Thomas  v.  Musical  Mut.  Protec- 
tive Union  (1888)  17  N.  Y.  St.  Rep.  51,  2  N.  Y.  Supp.  195,  49  Hun,  171; 
People  V.  St.  Franciscus  Ben.  Soc.  (1862)  24  How.  Pr.  (N.  Y.)  221.  Con- 
tra, Skelly  V.  Private  Coachmen's  Ben.  Soc.  (1884)  13  Daly  (N.  Y.)  2. 
See  Great  Falls  M.  F.  Ins.  Co.  v.  Harvey  (1864)  45  N.  H.  292,  and  Hi- 
bernia  Fire  Engine  Co.  v.  Harrison  (1880)  93  Pa.  St.  269. 

67  People  V.  St.  Franciscus  Ben.  Soc.  (1862)  24  How.  Pr.  (N.  Y.)  221; 
Thomas  v.  Musical  Mut.  Protective  Union  (1888)  17  N.  Y.  St.  Rep.  51,  2 
N.  Y.  Supp.  195,  49  Hun,  171. 

68  In  re  Klaus  (1886)  67  Wis.  401. 

69  Kolff  V.  St.  Paul  Fuel  Exchange  (1892)  48  Minn.  215,  50  N.  W.  1036, 

(131) 


§   112  BY-LAWS.  [Ch.  5 

patronaj]:e  from  those  who  are  not  members.'^®  But  one 
who  borrows  money  from  a  corporation  is  estopped  from 
setting  up  as  a  defense  against  payment  that  the  loan  was 
made  in  violation  of  the  by-laws.'^^  However,  a  member 
cannot  complain  of  an  illegal  by-law  which  has  not  injured 
himJ^  A  New  York  court  has  said  that  it  knows  "of  no 
authority  which  permits  one  to  bring  an  action  to  annul 
a  by-law  on  the  ground  of  its  alleged  invalidity.  It  is  only 
where  an  attempt  is  made  to  enforce  it  to  his  detriment 
that  he  can  question  its  validity.  Neither  can  he  invoke 
equitable  relief  unless  there  is  reason  to  apprehend  some 
irreparable  iujury.''^^  Hence,  a  by-law  enacted  by  the  trus- 
tees of  an  association  will  not  be  set  aside  on  the  suit  of  a 
minority  stockholder  on  the  ground  that  certain  of  its  pro- 
visions are  in  excess  of  the  powers  of  the  trustees,  so  long 
as  the  trustees  act  within  their  charter  powers.'^^  And  the 
mere  fact  that  a  corporation  has  adopted  an  illegal  by-law 
does  not  absolve  its  debtors  from  compliance  with  their 
contracts  unaffected  by  the  illegal  by-law.'^*  It  has  been 
held  that  a  by-law  void  as  to  nonassenting  members  maj 
be  good  as  a  contract  by  assenting  members^® 

TOBoutwell  V.  Marr  (1899)  71  Vt.  1,  43  L.  R.  A.  803. 

71  Reynolds  v.  Georgia  State  B.  &  L.  Ass'n  (1897)  102  Ga.  126,  29  S. 
E.  187. 

72  United  States  S.  &  L.  Co.  v.  Shaln  (1898)  8  N.  D.  136,  77  N.  W.  1006, 

73  Burden  v.  Burden   (1899)    159  N.  Y.  287,  54  N.  E,  17,  affirming  & 
App.  Div.  160. 

74  Burden  v.  Burden  (1896)  8  App.  Div.  160. 

75  Orangeville  Mut.  S.  F.  &  L.  Ass'n  v.  Young  (1880)  9  Wkly.  Notes 
Gas.  251. 

76  Skelly  V.  Private  Coachmen's  B.  &  O.  Soc  (1884)  13  Daly  (N.  Y.) 
2,  and  cases  cited. 

(132) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  114 

Same. 

§  113.  It  has  been  held,  however,  in  Louisiana,  that  a 
stockholder  who  had  accepted  an  offer  for  stock  on  which 
was  printed  a  by-law  declaring  stock  forfeitable  for  non- 
payment of  an  assessment  was  bound  by  such  by-law  as  a 
member  of  the  association,  although  he  was  not  present  at 
the  meeting  at  which  the  by-law  was  adopted,  and  although 
the  corporation  had  no  power  to  pass  such  a  by-law.^'^  It 
has  been  held  in  Massachusetts  that  one  who,  in  order  to 
become  a  member  of  a  corporation,  signed  a  by-law  which 
pledged  the  members  to  be  liable  "in  their  individual  as 
well  as  their  collective  capacities"  for  all  money  lent  to 
the  corporation,  was  not  thereby  rendered  personally  liable 
to  the  lender  for  money  subsequently  lent  to  the  corpora- 
tion, where  there  was  no  evidence  that  the  money  was  ad- 
vanced on  the  credit  of  the  by-law,  except  the  fact  that  the 
preamble  of  the  by-law  set  forth  that  the  design  of  the 
corporation  was  to  afford  to  persons  desirous  of  saving 
their  money  the  means  of  employing  it  to  advantage/^ 

Effect  of  violation. 

§  114.  Although  a  transfer  of  stock  not  in  accordance 
with  the  by-laws  may  be  eflcacious  to  pass  at  least  the  equi- 
table title,^^  the  transferee  has  no  right  to  compel  the  cor- 
poration to  issue  to  him  a  new  certificate  until  he  has  com- 

77  Lesseps  v.  Architects'  Co.  (1849)  4  La.  Ann.  316. 

78  Flint  V.  Pierce  (1868)  99  Mass.  68. 

79  Sargent  v.  Essex  Marine  Ry.  Co.  (1829)  9  Pick.  (Mass.)  201;  Sar- 
gent V.  Franklin  Ins.  Co.  (1829)  8  Pick.  (Mass.)  90;  Moore  v.  Bank  of 
Commerce  (1873)  52  Mo.  379;  Wilson  v.  St.  Louis  &  S.  F.  Ry.  Co  (1891) 
108  Mo.  588,  18  S.  W.  286. 

(133) 


§  115  BY-LAWS.  [Ch.    5 

plied  fully  with  the  provisions  of  the  by-laws  upon  that 
subject.*"  And  where  the  charter  of  a  mutual  benefit  so- 
ciety declares  that  beneficiaries  may  be  changed  in  the 
manner  provided  by  the  by-laws,  a  change  made  in  a  man- 
ner not  authorized  by  the  by-laws  is  invalid.*^  Rights  ac- 
quired by  a  stockholder  before  he  purchases  stock,  and 
without  notice  of  the  by-laws,  are  not  affected  by  his  con- 
structive notice  of  the  by-laws  created  by  his  subsequent 
purchase  of  stock.  Thus,  a  person  who  has  contracted 
with  a  corporation  for  the  purchase  of  its  land,  which  con- 
tract is  not  executed  in  the  manner  provided  by  the  by- 
laws, may  assert  in  equity  rights  conferred  on  him  by  his 
contract,  even  though  he  becomes  a  member  of  the  corpo- 
ration before  the  time  when  he  is  entitled  under  the  con- 
tract to  receive  a  deed  for  the  property .^^ 

Same. 

§  115.  Under  by-laws  of  an  incorporated  society  form- 
ed for  other  than  business  purposes,  a  person  who  has  not 
been  admitted  a  member  in  the  manner  prescribed  by  the 
by-laws  cannot  assert  rights  of  membership.**  Where  a 
policy  of  insurance  issued  by  a  mutual  fire  insurance  com- 
pany provides  that  due  notice  of  loss  shall  be  given,  but 
does  not  specify  the  manner  of  giving  the  notice,  and  makes 
no  reference  to  the  by-laws  of  the  company,  the  member 

80  Bishop  V.  Globe  Co.  (1883)  135  Mass.  132;  State  v.  New  Orleans 
&  C.  R.  Co.  (1878)  30  La.  Ann.,  Pt.  I,  308. 

81  Head  v.  Supreme  Council,  C.  K.  (1895)  64  Mo.  App.  212. 
8»Wait  V.  Smith  (1879)  92  111.  385. 

•«  Gray  v.  Christian  Society  (1884)  137  Mass.  331. 
(134) 


Ch.    5]  KFFECT  OF  BY-LAWS.  §   115 

need  not  give  notice  in  the  form  prescribed  by  th'^  by-laws 
in  order  to  acquire  a  right  to  the  insurance  money .^^  Un- 
der a  by-law  which  provides  that  a  member  who  has  been 
suspended  may  be  reinstated  provided  he  pays  all  assess- 
ments, a  suspended  member  who  pays  such  assessments  im- 
mediately becomes  restored  to  the  rights  of  membership, 
without  any  action  by  the  society  itself.^^  Where  the  by- 
laws of  a  mutual  benefit  society  provide  that  any  member 
disabled  by  sickness  shall,  on  application,  receive  a  cer- 
tain weekly  payment  until  he  recovers  or  dies,  a  member  is 
not  entitled  to  draw  such  payments  for  any  period  previous 
to  his  making  application  therefor.^®  Where  a  mutual 
benefit  society  fails  to  pay  a  member  the  benefits  to  which 
he  is  entitled  under  its  by-laws,  he  has  a  right  to  sue  the 
society  therefor,^"^  and  a  by-law  giving  him  the  right  to  ap- 
peal from  a  subordinate  to  a  higher  tribunal  of  the  society 
does  not  deprive  him  of  the  right  to  bring  such  suit.^* 
In  a  case  where  it  appeared  that  a  railroad  cor- 
poration, at  its  organization,  adopted  a  by-law  provid- 
ing that  its  net  earnings  should  be  divided  semi-annually 
among  its  stockholders,  first  paying  a  certain  percentage 
upon  its  preferred  stock,  and  afterwards  dividing  the  re- 
mainder between  the  holders  of  its  preferred  and  common 

84  Kingsley  v.  New  England  M.  F.  Ins.  Co.  (1851)  8  Cush.  (Mass.)  402. 

ssManson  v.  Grand  Lodge  (1883)  30  Minn.  509. 

ssBreneman  v.  Franklin  Beneficial  Ass'n  (1842)  3  Watts  &  S.  (Pa.) 
218. 

87  Dolan  V.  Court  of  Good  Samaritan  (1880)  128  Mass.  437. 

88Baur  V.  Samson  Lodge   (1885)   102  Ind.  270;   Supreme  Council  v. 
Garrigus  (1885)  104  Ind.  133. 

(135) 


§   117  BY-LAWS.  [Ch.  5 

stock,  it  was  held  that  the  subscribers  for  the  preferred 
stock  took  their  shares  upon  the  conditions  named  in  the 
by-laws  as  the  contract  between  themselves  and  the  corpo- 
ration.** 

Conduct  of  meetings. 

§  116.  Where  a  corporation  has,  by  its  by-laws,  adopted 
the  rules  of  Cushing's  Manual  for  the  government  of  all 
debates  of  its  members,  a  member  cannot  be  punished  for 
any  offense  given  to  the  society  during  a  debate,  unless  such 
offense  is  punishable  according  to  the  rules  of  Cushing's 
Manual.^'' 

Transfer  of  stock. 

§  117.  The  neglect  of  a  corporation  to  enact  any  by- 
law in  reference  to  the  transfer  of  stock,  where  the  statute 
declares  that  stock  "shall  be  transferred  only  on  the  books 
of  the  corporation  in  such  manner  as  the  by-laws  may  pre- 
scribe," does  not  relieve  a  stockholder  from  liability  upon 
stock  which  he  has  sold  without  having  it  transferred  on 
the  books  of  the  company,  according  to  the  usage  of  the 
company,  since,  as  to  a  stockholder,  the  common  usage  of 
the  corporation  supplies  the  place  of  such  a  by-law.^^ 
Where  the  constitution  and  by-laws  prescribe  the  manner 
in  which  the  treasurer  may  be  called  upon  to  surrender  his 
books  for  examination,  he  cannot  be  required,  by  a  ma- 
jority vote  of  the  members,  to  submit  his  books  in  a  differ- 

89  Belfast  &  W.  L.  R.  Co.  v.  City  of  Belfast  (1885)  77  Me.  445. 
80  People  V.  American  Institute  (1873)  44  How.  Pr.  (N.  Y.)  468. 
«i  Plumb  V.  Bank  of  Enterprise  (1892)  48  Kan.  484,  29  Pac.  699. 
(136) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §   119 

ent  manner.®^  Nor  can  a  fraternal  organization,  by  by- 
law, make  the  local  branch  the  agents  of  a  member  in  his 
negotiation  for  insurance.®^  A  by-law  of  a  building  and 
loan  association  which  allows  members,  on  notice,  to  sur- 
render their  stock,  and  take  the  withdrawal  value  in  cash, 
has  the  effect  of  transforming  a  member  who  has  given 
such  notice  from  a  stockholder  into  a  creditor  of  the  asso- 
ciation.®* 

Changes  in  by-laws. 

§  118.  A  subject  of  much  importance  to  members  of 
mutual  insurance  and  of  building  and  loan  associations  is 
the  effect  upon  them  of  subsequent  alterations  of  the  by- 
laws. In  recent  years,  this  question  has  been  a  fertile 
source  of  litigation,  and  the  decisions  are  in  irreconcilable 
conflict.  The  following  summary  of  the  various  alterations 
which  have  been  construed  by  the  courts  will  show  the  wide 
variation  of  judicial  opinion  on  this  subject. 

Same — Changes  held  valid. 

§  119.  The  following  alterations  of  the  by-laws  hare 
been  held  to  be  binding  upon  members,  although  made  af- 
ter the  issue  of  their  certificates:  Reducing  benefits  or 
payments ;^^  increasing  assessments!;®^  regulating  the  or- 

•2  Connell  v.  Stalker  (1897)  21  Misc.  Rep.  609,  48  N.  Y.  Supp.  77. 
93McMahon  v.  Supreme  Tent,  K.  of  M.  (1899)  151  Mo.  522,  52  S.  W. 
384. 

94  McNab  V.  Southern  Mut.  B.  &  L.  Ass'n  (1897)  50  S.  C.  89,  27  S. 
E.  543. 

95  Pain  V.  Societe  St.  Jean  Baptiste  (1899)  172  Mass.  319,  52  N.  E. 
502;   Fugure  v.  Mutual  Society  of  St.  Joseph    (1874)    46  Vt.  362;    Su- 

(137) 


§    119  BY-LAWS.  ["Ch.  5 

der  of  payment  ;®''^  changing  the  conditions  upon  which 
loans  are  made;^^  changing  the  rules  regulating  redemp- 
tion f^  limiting  withdrawing  members  to  a  certain  propor- 
tion of  the  receipts  ;^"'*  forfeiting  the  policy  in  case  of  sui- 
cide ;^"'^  forfeiting  the  policy  in  case  the  insured  engages 
in  the  saloon  business  or  liquor  trade ;^°2  restricting  the 

preme  Lodge,  K.  of  P.,  v.  Knight  (1889)  117  Ind.  489,  20  N.  B.  479; 
Bowie  V.  Grand  Lodge,  K.  of  W.  (1893)  99  Cal.  392,  34  Pac.  103;  Mc- 
Cabe  V.  Father  Matthew  T.  A.  B.  Soc.  (1881)  24  Hun  (N.  Y.)  149; 
Poultney  v.  Bachman  (1883)  31  Hun  (N.  Y.)  49;  Duer  v.  Supreme 
Council,  0.  of  C.  F.  (1899)  21  Tex.  Civ.  App.  493,  52  S.  W.  109. 

96  Fullenwider  v.  Supreme  Council  of  R.  L.  (1899)  180  111.  621,  54  N. 
E.  485;  Pioneer  S.  &  L.  Co.  v.  Brockett  (1895)  58  111.  App.  204;  Pioneer 
S.  &  L.  Co.  V.  Miller  (1895)  58  111.  App.  211. 

97  Engelhardt  v.  Fifth  Ward  P.  D.  S.  &  L.  Ass'n  (1896)  148  N.  Y.  281, 
42  N.  E.  710;  Pepe  v.  City  &  S.  P.  Bldg.  Soc.  [1893]  2  Ch.  311;  Eastern 
B.  &  L.  Ass'n  V.  Snyder  (1900)  98  Va.  710,  37  S.  E.  298. 

98  Maynard  v.  Interstate  B.  &  L.  Ass'n  (1900)  112  Ga.  443,  37  S.  E.  741. 

99  Wilson  V.  Miles  Platting  Bldg.  Soc.  (1887)  22  Q.  B.  Div.  381;  Rosen- 
berg V.  Northumberland  Bldg.  Soc.  (1889)  22  Q.  B.  Div.  373;  Bradbury 
V.  Wild  [1893]  1  Ch.  377. 

100  House  V.  Eastern  B.  &  L.  Ass'n  (1900)  52  App.  Div.  163,  66  N.  Y. 
Supp.  109;  Pawlick  v.  Homestead  Loan  Ass'n  (1896)  15  Misc.  Rep. 
427,  37  N.  Y.  Supp.  164;  Bearden  v.  People's  B.,  L.  &  S.  Ass'n  (Tenn. 
Ch.  App.;  1898)  49  S.  W.  64;  Stilwell  v.  People's  B.,  L.  &  S.  Ass'n  (1899) 
19  Utah,  257,  57  Pac.  14. 

101  Supreme  Commandery  v.  Ainsworth  (1882)  71  Ala.  449;  Supreme 
Lodge,  K.  of  P..  v.  Kutscher  (1899)  179  111.  340,  53  N.  E.  620;  Hughes 
V.  Wisconsin  Odd  Fellows'  Mut.  Life  Ins.  Co.  (1898)  98  Wis.  292;  Su- 
preme Lodge,  K.  of  P.,  V.  La  Malta  (1895)  95  Tenn.  157,  31  S.  W.  493; 
Daughtry  v.  Knights  of  Pythias  (1896)  48  La.  Ann.  1203,  20  So.  712; 
Supreme  Tent,  K.  of  M.,  v.  Hammers  (1899)  81  111.  App.  560  (extend- 
ing the  period  within  which  suicide  nullifies  the  policy). 

102  Moerschbaecher  v.  Supreme  Council  of  R.  L.   (1900)    188  111.  9; 

(138) 


Ch.  5]  EFFECT  OP  BY-LAWS.  §   119 

designation  of  beneficiaries  ;^*'^  changing  the  method  of  de- 
termining beneficiaries;^"^  forfeiting  benefits  for  breach  of 
newly-imposed  conditions  ;^*'^  referring  disputes  to  arbi- 
tration ;^°^  requiring  the  submission  of  claims  to  the  asso- 
ciation;^*'''^ providing  for  periodical  readjustment  of  in- 
surance;^®^ imposing  certain  formalities  and  payments  as 
conditions  of  membership  ;^°*  transferring  the  power  to 
select  a  railway  route  from  the  stockholders  to  the  direct- 
Qj.g.110  forfeiting  membership  for  joining  certain  organiza- 
tions ;^^^  repealing  provision  for  payment  of  loans  before 

Bllerbe  v.  Faust  (1894)  119  Mo.  653,  25  S.  W.  390;  State  v.  Grand  Lodge, 
A.  O.  U.  W.  (1897)  70  Mo.  App.  456;  People  v.  Grand  Lodge,  A.  O.  U. 
W.  (1900)  32  Misc.  Rep.  528,  67  N.  Y.  Supp.  330;  Loeffler  v.  Modern 
Woodmen  (1898)  100  Wis.  79,  75  N.  W.  1012;  Schmidt  v.  Supreme  Tent, 
K.  of  M.  (1897)  97  Wis.  528,  73  N.  W.  22. 

103  Baldwin  v.  Begley  (1900)  185  111.  180,  56  N.  E.  1065;  Roberta  v. 
Grand  Lodge,  A.  O.  U.  W.  (1901)  33  Misc.  Rep.  536,  68  N.  Y.  Supp.  949; 
Hysinger  v.  Supreme  Lodge,  K.  &  L.  of  H.  (1890)  42  Mo.  App.  627. 

104  Masonic  Mut.  Ben.  Ass'n  v.  Severson  (1899)  71  Conn.  719,  43  Atl. 
192;  Supreme  Council,  A.  L.  of  H.,  v.  Adams  (1895)  68  N.  H.  236,  44 
Atl.  380. 

105  Smith  T.  Galloway  [1898]  1  Q.  B.  Div.  71;  MacDowell  v.  Ackley 
(1880)  93  Pa.  St.  277;  Borgards  v.  Farmers'  Mut.  Ins.  Co.  (1890)  79 
Mich.  440,  44  N.  W.  856. 

106  Mackenzie  v.  Everton  &  W.  D.  Permanent  Ben.  Bldg.  Soc.  (1890) 
61  Law  T.   (N.  S.)   680. 

107  Robinson* V.  Templar  Lodge,  No.  17,  I.  O.  O.  F.  (1897)  117  CaL 
370,  49  Pac.  170. 

108  Korn  v.  Mutual  Assur.  Soc.  (1810)  6  Cranch  (U.  S.)  192. 

109  Taylor  v.  Edson  (1849)  58  Mass.  522. 

110  East  Tennessee  &  V.  R.  Co.  v.  Gammon  (1858)  5  Sneed  (Tenn.) 
567. 

111  Lawson  v.  Hewell  (1897)  118  Cal.  613,  50  Pac.  763. 

(139) 


§  120  BY-LAWS.  [Ch.  5 

maturity  ;^*^  and  repealing  provision  for  repayment  of  the 
amount  paid  in,  in  case  of  forfeiture.^  ^* 

Same — Changes  held  invalid. 

§  120.  On  the  other  hand,  the  following;  alterations  of 
the  by-laws  have  been  held  to  be  inoperative  as  to  members 
whose  certificates  were  issued  before  the  alteration :  Re- 
ducing benefits  ;^^^  limiting  benefits  or  profits  to  certain 
funds ;^^^  increasing  dues;^^^  restricting  the  designation  of 
beneficiaries  ;^^^  changing  widow's  benefit  after  husband's 
death  ;^^*  forfeiting  policy  in  case  of  suicide  ;^^®  changing 

112  Interstate  B.  &  L.  Ass'n  v.  Hafter  (1899)  76  Miss.  770,  24  So.  87. 

118  Schrick  v.  St.  Louis  Mut.  House  Bldg.  Co.  (1864)  34  Mo.  423. 

114  Knights  Templars'  &  M.  Life  Ind.  Co.  v.  Jarman  (1900)  44  C.  C.  A. 
93,  104  Fed.  638;  Stohr  v.  San  Francisco  M.  F.  Soc.  (1890)  82  Cal.  557, 
22  Pac.  1125;  Hale  v.  Equitable  Aid  Union  (1895)  168  Pa.  St.  377,  31 
Atl.  1066;  Becker  v.  Berlin  Ben.  Soc.  (1891)  144  Pa.  St.  232,  22  Atl. 
€99;  Grafstrom  v.  Frost  Council,  No.  21,  O.  of  C.  F.  (1897)  19  Misc.  Rep. 
180,  43  N.  Y.  Supp.  266;  Pellazzino  v.  German  Catholic  St.  J.  Soc. 
(1886)  16  Wkly.  Law  Bui.  (Ohio)  27.  And  see  opinion  of  the  attorney 
general  of  Illinois  in  Re  National  Home  B.  &  L.  Ass'n.  11  Nat.  Corp. 
Rep.  459. 

116  St.  Patrick's  Male  Beneficial  Soc.  v.  McVey  (1880)  92  Pa.  St. 
610;  Pokrefky  v.  Detroit  Firemen's  Fund  Ass'n  (1899)  121  Mich.  456, 
80  N.  W.  240;  Sinteff  v.  People's  B.,  L.  &  S.  Ass'n  (1899)  37  App. 
Div.  340,  57  N.  Y.  Supp.  611;  Interstate  B.  &  L.  Ass'n  v.  Ouzts  (1899) 
54  S.  C.  214,  32  S.  E.  303. 

116  Hibemia  Fire  Engine  Co.  v.  Commonwealth  (1880)  93  Pa.  St.  268. 

117  Spencer  v.  Grand  Lodge,  A.  O.  U.  W.  (1897)  22  Misc.  Rep.  147. 
48  N.  Y.  Supp.  590,  affirmed,  without  opinion,  53  App.  Div.  627,  65 
N.  Y.  Supp.  1146;  Swain  v.  Grand  Lodge.  A.  O.  U.  W.  (1899)  22  Pa.  Co. 
Ct.  Rep.  548,  8  Pa.  Dist.  Rep.  407;  Wist  v.  Grand  Lodge,  A.  O.  U.  W. 
(1892)  22  Or.  271,  29  Pac.  610;  Folmer's  Appeal  (1878)  87  Pa.  St.  133. 

118  Gundlach  v.  Germania  Mechanics'  Ass'n  (1875)  4  Hun  (N.  Y.)  339. 
(140) 


Cll.  5]  EFFECT  OF  BY-LAWS.  12o  § 

conditions  of  withdrawal  ;^^®  giving  the  corporation  addi- 
tional time  to  pay  losses  ;^^^  postponing  benefits  as  a  penal- 
ty for  arrears  ;^^^  forfeiting  policy  for  nonpayment  of  as- 
sessments;*^^ forfeiting  policy  for  arrears  of  certain  dura- 
tion;*^* discontinuing  sissessment  of  nonborrowing  mem- 
bers, and  changing  the  maturity  of  the  debts  of  borrowing 
members  ;*^^  imposing  conditions  on  reinstatement  of  de- 
linquents;*^® forfeiting  policy  for  breach  of  newly-imposed 
condition;* 2'^  providing  for  submission  of  claims  to  the  as- 
sociation;*^® changing  from  mutual  to  old-line  insurance 
basis  ;*^^  arbitrarily  placing  all  members  who  join  in  a  cer- 
tain year  in  a  class  by  themselves,  and  advancing  their 
ages  each  year  as  assessments  are  made,  while  all  other 

119  Northwestern  B,  &  M.  Aid  Ass'n  v.  Wanner  (1887)  24  111.  App,  358; 
Smith  V.  Supreme  Lodge,  K.  of  P.  (1900)  83  Mo.  App.  512. 

120  Savage  v.  People's  B.,  L.  &  S.  Ass'n  (1898)  45  W.  Va,  275,  31  S. 
E.  991. 

121  Morrison  v.  Wisconsin  Odd  Fellows'  Mut.  Life  Ins.  Co.  (1884) 
59  Wis.  162;  Wheeler  v.  Supreme  S.  O.  of  I.  N.  (1896)  110  Mich.  437, 
68  N.  W.  229. 

122  Coyle  V.  Father  Matthew  T.  A.  B.  Soc.  (1883)  17  Wkly.  Dig.  (N. 
T.)  17. 

123  McNeil  V.  Southern  Tier  M.  R.  Ass'n  (1899)  40  App.  Div.  581,  58 
N.  Y.  Supp.  119. 

124  Fire  Ins.  Co.  v.  Connor  (1851)  17  Pa.  St.  136. 

125  International  B.  &  L.  Ass'n  v.  Braden  (Tex.  Civ.  App. ;  1895)  32 
S.  W.  704. 

126  Sieverts  v.  National  Benev.  Ass'n  (1895)  95  Iowa,  710,  64  N,  W. 
671. 

127  Becker  v.  Farmers'  Mut.  Fire  Ins.  Co.   (1882)   48  Mich.  610. 

128  Brotherhood  of  Railroad  Trainmen  v.  Newton  (1898)  79  111.  ApiK 
500. 

129  Covenant  Mut.  Life  Ass'n  v.  Kentner  (1900)  188  111.  431. 

(141) 


§   121  BY-LAWS.  [Ch.   5 

members  joining  thereafter  are  assessed  as  of  the  age  of 
entry  ;^^°  arbitrarily  retiring  part  of  the  stock  ;^^^  giving 
preference  to  certain  shares  of  stock  ;^^2  making  a  mem- 
ber's application  part  of  his  contract  ;^^^  providing  for  the 
publication  of  notice  of  assessments  in  another  state,  and 
authorizing  forfeiture  without  actual  notice ;^^^  imposing 
conditions  as  to  residence  upon  the  holder  of  a  scholar- 
ship ;^^^  repealing  a  provision  establishing  a  withdrawal 
value  of  shares  ;^^®  repealing  a  provision  for  withdrawal 
upon  notice,  and  for  repayment  of  the  amount  actually 
paid  in;^^'^  and  repealing  a  provision  for  benefit  for  total 
disability  resulting  from  paralysis.^^* 

Same — ^By-laws  as  part  of  member's  contract. 

§  121.  The  conflict  of  opinion  extends  to  the  constit- 
uent elements  of  the  contract  of  membership.  It  is  gen- 
erally held,  however,  that  the  by-laws  enter  into  and  form 

i30Ebert  v.  Mutual  R.  F.  Life  Ass'n  (1900)  81  Minn.  116,  83  N.  W. 
506;  Strauss  v.  Mutual  R.  F.  Life  Ass'n  (1900)  126  N.  C.  971,  36  S.  E. 
352. 

131  Bergman  v.  St.  Paul  Mut.  Bldg.  Ass'n  (1882)  29  Minn.  275. 

132  Kent  V.  Quicksilver  Mining  Co.  (1879)  78  N.  Y.  182. 

183  Grand  Lodge,  A,  O.  U.  W.,  v.  State  (1891)  44  Mo.  App.  445. 

i3*Thibert  v.  Supreme  Lodge,  K.  of  H.  (1899)  78  Minn.  448,  81  N.  W. 
220. 

136  Illinois  Conference  v.  Female  College  (1860)  25  111.  148. 

136  Louisville  German  B.  &  L.  Ass'n  v.  Wissing  (1882)  4  Ky.  Law 
Rep.  443. 

i37Holyoke  B.  &  L.  Ass'n  v.  Lewis  (1891)  1  Colo.  App.  127,  27  Pac. 
872. 

188  Starling  v.  Supreme  Council,  R.  T.  of  T.  (1896)  108  Mich.  440. 
(142) 


Ch.   5]  EFFECT  OF  BY-LAWS.  |   121 

part  of  a  member's  contract/ ^^  whether  referred  to  in  his 
•certificate  of  membership  or  not.^^*^  Of  course  the  by-laws 
may  be  expressly  excluded,  as  where  certificates  of  mem- 
bership expressly  provide  that  the  application  for  mem- 
bership and  the  certificate  "shall  constitute  the  complete 
and  only  contract"  between  members  and  the  associa- 
tion.^^^  But,  assuming  that  the  by-laws  become  part  of 
the  contract  of  membership,  the  decisions  are  in  conflict  as 
to  what  by-laws  thus  enter  into  the  contract.  Some  courts 
Jiold  that  only  the  by-laws  in  existence  when  his  certificate 

139  Supreme  Lodge,  K.  of  P.,  v.  Knight  (1889)  117  Ind.  489,  20  N.  B. 
479;  Sabin  v.  Senate  of  National  Union  (1892)  90  Mich.  177,  51  N.  W. 
202;  Van  Poucke  v.  Netherland  St.  V.  de  P.  Soc.  (1886)  63  Mich.  378, 
29  N.  W.  863;  Wist  v.  Grand  Lodge,  A.  O.  U.  W.  (1892)  22  Or.  271,  29 
Pac.  610;  Ebert  v.  Mutual  R.  F.  Life  Ass'n  (1900)  81  Minn.  116.  83 
N.  W.  506;  Newton  v.  Northern  Mut.  Relief  Ass'n  (1899)  21  R.  L  476, 
44  Atl.  690;  Supreme  Council  of  R.  A.  v.  Brashears  (1899)  89  Md. 
624,  43  Atl.  866;  Conway  v.  Supreme  Council  C.  K.  of  A.  (1901)  131 
Cal.  437,  63  Pac.  727;  Clark  v.  Lehman  (1896)  65  111.  App.  238;  Strauss 
V.  Mutual  R.  F.  Life  Ass'n  (1900)  126  N.  C.  971.  36  S.  E.  352;  French 
V.  Society  Select  Guardians  (1898)  23  Misc.  Rep.  86,  51  N.  Y.  Supp. 
675;  Becker  v.  Farmers'  Mut.  Fire  Ins.  Co.  (1882)  48  Mich.  610;  Stil- 
well  V.  People's  B.,  L.  &  S.  Ass'n  (1899)  19  Utah,  257.  57  Pac.  14; 
Drum  V.  Benton  (1898)  13  App.  D.  C.  245;  Lake  v.  Minnesota  Masonic 
Relief  Ass'n  (1895)  61  Minn.  96,  63  N.  W.  26L 

1*0  Supreme  Commandery  v.  Ainsworth  (1882)  71  Ala.  449;  Haas  v. 
Mutual  Relief  Ass'n  (1897)  118  Cal.  6,  49  Pac.  1056;  Clark  v.  Mutual 
R.  F.  Life  Ass'n  (1899)  14  App.  D.  C.  154;  Moss  v.  Littleton  (1895) 
6  App.  D.  C.  201;  Condon  v.  Mutual  R.  F.  Life  Ass'n  (1899)  89  Md. 
99,  42  Atl.  944;  May  v.  New  York  Safety  R.  F.  Soc.  (1888)  14  Daly 
(N.  Y.)  389.  Contra,  Given  v.  Rettew  (1894)  162  Pa.  St.  638,  29  Atl. 
703.  And  see  Parish  v.  Bankers'  Life  Ass'n  (111.;  1897)  14  Nat.  Corp. 
JElep.  182. 

141  Covenant  Mut.  Life  Ass'n  v.  Tuttle  (1900)  87  111.  App.  309. 

(143) 


§   122  BY-LAWS.  [Oh.  5 

issued  are  binding  upon  a  member,  in  the  absence  of  ex- 
press provision  as  to  future  by-laws.^*^ 

Same — Reservation  of  right  to  amend. 

§  122.  But  where  the  power  to  amend  is  reserved  in 
the  by-laws,  it  has  been  held  that  a  member  is  charged 
with  notice  of  this,  as  well  as  any  other,  by-law.^ ^^  A  mem- 
ber cannot  single  out  one  by-law,  and  claim  that  to  be 
absolute.  The  by-laws  must  be  taken  as  a  whole,  and  a 
by-law  giving  the  right  to  amend  or  repeal  is  as  much  a 
part  of  his  contract  as  the  by-law  under  which  he  claims 
his  right  to  benefits.^*^  Indeed,  some  courts  take  the 
position  that,  since  the  power  to  alter  the  by-laws  is  in- 
herent, it  need  not  be  expressed,^^^  and  that  a  mem- 
ber is  bound  by  subsequent  alterations  unless  the  power 
of  alteration  is  expressly  limited  by  the  rules.^^^  On 
the  other  hand,  it  has  been  held  that,  where  no  provision  for 
amendment  is  made,  subsequent  amendments  are  without 

142  Covenant  Mut.  Life  Ass'n  v.  Kentner  (1900)  188  111.  431;  Cove- 
nant Mut.  Life  Ass'n  v.  Tuttle  (1900)  87  111  App.  309;  Northwestern 
B.  &.  M.  Aid  Ass'n  v.  Wanner  (1887)  24  111.  App.  358;  Pokrefky  v.  De- 
troit Firemen's  Fund  Ass'n  (1899)  121  Mich.  456,  80  N.  W.  240;  Becker 
V.  Farmers'  Mut.  Fire  Ins.  Co.  (1882)  48  Mich.  610.  See  Siewerts  v. 
National  Benev.  Ass'n  (1895)  95  Iowa,  710,  64  N.  W.  671,  and  Hughes  v. 
Wisconsin  Odd  Fellows'  Mut.  Life  Ins.  Co.  (1898)  98  Wis.  292. 

1*8  Wist  v.  Grand  Lodge,  A.  O.  U.  W.  (1892)  22  Or.  271,  29  Pac.  610. 

144  Poultney  v.  Bachman  (1883)  31  Hun  (N.  Y.)  52. 

145  Supreme  Lodge,  K.  of  P.,  v.  Knight  (1889)  117  Ind.  489,  20  N.  B. 
479;  Stohr  v.  San  Francisco  M.  P.  Soc.  (1890)  82  Cal.  557,  22  Pac.  1125. 
And  see  Fullenwider  v.  Supreme  Council  of  R.  L.  (1899)  180  111.  621, 
54  N.  E.  485;  Covenant  Mut.  Life  Ass'n  v.  Kentner  (1900)  188  111,  431. 

146  Lawson  v.  Hewell  (1897)  118  Cal.  613. 
(144) 


Ch.    5]  EFFECT  OP  BY-LAWS.  §  123 

\ 

effect.^*''  And  the  terms  of  the  certificate  or  contract  may 
be  so  absolute  and  unqualified  as  to  place  it  beyond  the 
power  of  alteration.^''* 

It  is  customary,  however,  to  refer  to  the  by-laws  in 
the  certificate  of  membership,  and  to  provide  therein  for 
the  operation  of  subsequent  enactments.  The  usual  pro- 
vision is  that  a  member  shall  be  bound  by  all  by-laws 
then  in  force,  or  that  may  thereafter  be  enacted.  Of  course 
the  power  to  make  new  by-laws  necessarily  includes  the 
power  to  amend  or  repeal  those  theretofore  made;^^®  and 
an  alteration  is  a  fro  tanto  repeal.^ '^^^  The  determination 
of  the  limit  of  alteration  under  such  provisions  has  given 
rise  to  much  difference  of  judicial  opinion. 

Same — ^Lawful  and  reasonable  amendments  only. 

§  123.  In  the  first  place,  it  may  be  said  that  all  subse- 
quent by-laws  are  subject  to  the  same  limitations  as  the 
original  by-laws,  i.  e.,  they  must  not  conflict  with  the  stat- 
utes of  the  state  or  the  charter  of  the  organization ;  they 
must  be  reasonable,  and  in  conformity  with  the  nature 
and  objects  of  the  organization.i'^i     The  power  to  make 

14T  KrakowsM  v.  North  New  York  B.  &  L.  Ass'n  (1894)  7  Misc.  Rep.. 
188,  27  N.  Y.  Supp.  314. 

1*8  Sinteff  V.  People's  B.,  L.  &  S.  Ass'n  (1899)  37  App.  Div.  340,  57  N. 
Y.  Snpp.  611,  and  the  construction  put  upon  it  in  House  v.  Eastern  B.  & 
L.  Ass'n  (1900)  52  App.  Div.  163,  66  N.  Y.  Supp.  109.  And  see  the  dic- 
tum in  Stohr  v,  San  Francisco  M.  F.  Soc.  (1890)  82  Cal.  557,  22  Pae. 
1125. 

149  Fullenwider  v.  Supreme  Council,  R.  L.  (1899)  180  III.  621,  54  N 
E.  485. 

150  Kent  V.  Quicksilver  Mining  Co.  (1879)  78  N.  Y.  159. 

vn  Stilwell  v.  People's  B.,  L.  &  S.  Ass'n  (1899)  19  Utah.  257,  57  Pac. 
14;  Korn  v.  Mutual  Assur.  Soc.  (1810)  6  Cranch  (U.  S.)  192. 

(145) 
Boisot  By  Laws — 10. 


§  123  BT-LAWa  [Ch.    5 

by-laws  is  a  power  to  make  such  as  are  not  inconsistent 
with  the  law,  and  the  power  to  alter,  which  is  merely  the 
making  of  another  by-law  on  the  same  subject,  has  the  same 
limit.  A  Pennsylvania  case  affords  a  good  illustration  of 
this  principle.  A  volunteer  fire  organization,  which  had 
ceased  to  run  to  fires  in  consequence  of  the  creation  of  a 
paid  fire  department,  converted  its  effects  into  cash,  and 
leased  its  engine  house.  A  few  months  afterwards,  the 
by-laws  were  changed  so  as  to  increase  the  monthly  dues 
from  twelve  and  one-half  cents  to  two  dollars.  "Its  con- 
stitution," said  the  court,  "declares  the  object  of  the  cor- 
poration shall  be  the  promotion  of  the  public  good  by  the 
extinguishing  of  fires,  and  the  funds  shall  be  appropriated 
to  no  other  object  than  that  for  which  it  was  provided. 
After  the  company  had  ceased  to  extinguish  fires,  had  sold 
its  engine  and  other  personalty,  and  leased  its  house,  what 
was  the  object  in  increasing  the  monthly  dues  of  its  mem- 
bers to  sixteen  times  their  former  rates?  It  did  not  pro- 
pose to  prove  any  object,  its  minutes  show  none,  and  none 
is  suggested.  ♦  ♦  •  With  its  business  gone,  its  per- 
sonal property  converted  into  money,  its  real  estate  leased, 
with  scarcely  any  legitimate  expenses,  and  thousands  of 
dollars  in  its  treasury,  the  amendment  to  the  by-laws  in- 
creasing dues  was  most  extraordinary  and  unreason- 
able."^**^ Assent  to  future  by-laws  means  only  such  as  are 
reasonable.^^^  Yet,  even  within  these  limits,  there  is  room 
for  much  conflict  of  opinion. 

152  Hibernia  Fire  Engine  Co.  v.  Commonwealth  (1880)  93  Pa.  St.  264. 

153  Thibert  v.  Supreme  Lodge,  K.  of  H.  (1899)  78  Minn.  448,  81  N.  W. 
(146) 


• 


Cll^  5]  EFFECT  OF  BY-LAWS.  §  124 

Same — Impairment  of  contract  not  allowed. 

§  124.  One  class  of  cases  confines  the  operation  of  sub- 
sequent alterations  within  the  narrowest  possible  limits. 
It  is  said  that,  while  a  member  has  no  right  to  presume  that 
no  change  will  be  made  in  the  by-laws,  he  cannot  be  held 
to  presume  that  his  contract  will  be  affected.  "The  fact 
that  it  reserved  the  right,  by  the  assent  of  the  member,  to 
make  future  by-laws  obligatory  upon  him,  could  not  justly 
be  deemed  to  comprehend  the  right  to  abate  its  debt,  for 
that  would  pro  tanto  destroy  the  contract  between  the  par- 
ties ;  and  to  permit  one  person  to  accept  the  consideration 
for  a  debt,  and  subsequently  to  deny  a  material  part  or  all 
of  such  debt,  would  authorize  a  patent  fraud,  which  the  law 
does  not  deem  to  have  been  within  the  intent  of  a  mere 
general  agreement  for  changes  in  the  contract.  Such  an 
agreement  only  contemplates  those  changes  which  fairly 
consist  with  the  full  obligation  entered  into.  It  does  not 
imply  that  the  obligation  itself  should  be  lessened  or  de- 
stroyed at  the  will  or  caprice  of  the  obligor. "i^*  Hence  it 
is  held  that  subsequent  by-laws  will  not  be  given  retro- 
active effect  unless  their  terms  are  imperative,^^^   even 

220;  Smith  v.  Supreme  Lodge,  K.  of  P.  (1900)  83  Mo.  App.  512;  Graf- 
strom  V.  Frost  Council,  No.  21  (1897)  19  Misc.  Rep.  180,  43  N.  Y.  Supp. 
266.  And  see  Wist  v.  Grand  Lodge,  A.  O.  U.  W.  (1892)  22  Or.  271,  29 
Pac.  610;  Ebert  v.  Mutual  R.  F.  Life  Ass'n  (1900)  81  Minn.  116,  83  N.  W. 
506.  It  is  suggested  in  Thibert  v.  Supreme  Lodge,  supra,  that  a  by-law 
may  be  reasonable  as  to  members  who  join  with  notice  of  it,  and  un- 
reasonable as  to  those  who  joined  before  its  enactment. 

15-t  Smith  V.  Supreme  Lodge,  K.  of  P.  (1900)  83  Mo.  App.  512. 

i55Grafstrom  v.  Frost  Council,  No.  21  (1897)  19  Misc.  Rep.  180,  43 
N.  Y.  Supp.  266;  Glover  v.  Lodge  (1883)   2  Del.  Co,  Rep.  25;  Wist  v. 

(147) 


§  125  BY-LAWS.  [Ch.   5 

though  both  the  member's  application  and  certificate  stipu- 
late that  his  right  to  participate  in  benefits  is  conditioned 
on  the  by-laws.^  ^^  The  doctrine  of  this  class  of  cases  may 
be  summarized  in  the  language  of  the  court  in  a  recent 
case  in  New  York  as  follows:  "The  true  doctrine,  we 
think,  is  that  a  by-law  of  such  an  association  that  would 
have  the  effect  of  materially  changing  or  impairing  the 
obligation  of  an  existing  contract  cannot  be  given  a  retro- 
active effect.  If  it  is  attempted  to  give  it  such  a  retroactive 
effect,  the  by-law  is  unreasonable,  especially  in  cases  where, 
by  the  terms  of  the  contract  of  insurance  entered  into  by 
such  a  corporation,  no  right  to  amend  its  by-laws  is  ex- 
pressly reserved."^  ^^ 

Same — Kembership  rights  and  insnrance  rights  distinguished. 

§  125.  Some  of  the  cases  taking  this  limited  view  of 
the  operation  of  subsequent  alterations  of  the  by-laws  make 
a  distinction  between  a  member's  rights  as  a  member  and 
his  rights  under  his  contract  of  insurance.  A  member,  it 
is  said,  occupies  a  dual  relation  to  the  company, — first,  as 
one  of  its  members,  and,  second,  as  any  other  individual 
having  a  contract  with  it.     In  the  former  relation,  he  is 

Grand  Lodge,  A.  O.  U.  W.  (1892)  22  Or.  271,  29  Pac.  610;  North- 
western B.  &  M.  Aid  Ass'n  v.  Wanner  (1887)  24  111.  App.  358;  Cove- 
nant Mut.  Life  Ass'n  v.  Kentner  (1900)  188  111.  431;  Insurance  Co.  v. 
Connor  (1851)  17  Pa.  St.  136;  Spencer  v.  Grand  Lodge,  A.  O.  U.  W. 
(1897)  22  Misc.  Rep.  147,  48  N.  Y.  Supp.  590;  Gundlach  v.  Germania 
Mechanics'  Ass'n  (1875)  4  Hun  (N.  Y.)  339. 

156  A.  O.  U.  W.  V.  Brown  (1901)  112  Ga.  545,  37  S.  E.  890. 

157  McNeil  V.  Southern  Tier  M.  R.  Ass'n  (1899)  40  App.  Div.  581,  &S 
N.  Y.  Supp.  119. 

a48) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  125 

bound  by  any  lawful  amendment  of  the  by-laws  concern- 
ing the  government  of  the  corporation  or  the  mode  of  trans- 
acting its  business  or  in  its  rules  of  discipline.^ ^®  But  in 
his  contract  for  insurance,  a  member  acts  for  himself,  and 
not  as  a  part  of  the  society;  his  rights  rest  upon  his  con- 
tract of  insurance,  not  upon  his  contract  of  membership  in 
the  society.^'^® 

In  an  early  case,  the  supreme  court  of  Pennsylvania 
said:  "A  mutual  insurance  company  differs  from  other 
insurance  companies  in  this,  that  the  person  insured  par- 
ticipates in  the  profits  and  losses.  These  rights  and  lia- 
bilities have  respect  to  his  corporate  privileges,  and  a  rea- 
sonable by-law  regulating  them  might  be  free  from  objec- 
tion. But  in  addition  to  his  rights  and  duties  as  a  corpo- 
rator, [he]  stands  before  us  as  a  party  to  a  covenant  ex- 
ecuted by  himself  on  the  one  part,  and  by  the  insurance 
company  under  its  corporate  seal  on  the  other.  His  rights 
under  that  covenant  are  as  fully  protected  by  law  from  the 
corporate  action  of  the  company  as  if  he  were  a  stranger. 
It  affects  not  his  rights  under  that  contract  that  by  virtue 
of  it  he  becomes  a  member  of  the  company,  and  as  such 
subject  to  liabilities  and  entitled  to  privileges.  This  is 
an  incident  of  the  contract  of  insurance  which  may  sub- 
ject his  corporate  rights  to  the  authority  of  the  corpora- 
tion ;  but  his  rights  as  a  party  insured  stand  entirely  free 
from  such  control."^ ^'^ 

iB«  Knights  Templars'  &  M.  Life  Ind.  Co.  v.  Jarman  (1900)  44  C.  C 
A.  93,  104  Fed.  638. 

iR»  Covenant  Mut.  Life  Ass'n  v.  Tuttle  (1900)  87  111.  App.  309. 
160  Insurance  Co.  y.  Connor  (1851)  17  Pa.  St.  136.     See,  also.  North- 

(149) 


§  126  BY-LAWa  [Ch.  5 

Same — Reservations  upheld. 

§  126.  On  the  other'hand,  another  line  of  decisions  hold 
that  it  is  simply  a  question  of  the  proper  construction  of 
a  contract.  Persons  may  well  contract  with  reference  to 
future  by-laws;  they  may  consent  that  such  by-laws  may 
enter  into  and  form  part  of  their  contracts,  modifying  or 
varying  them.  It  is  their  voluntary  agreement  which  re- 
lieves the  operation  of  such  changes  from  all  imputation 
of  injustice.  "The  fundamental  principle  of  such  organi- 
zations is  the  mutuality  of  duty  and  equality  of  rights  of 
the  membership,  without  regard  to  the  time  of  admission. 
This  cannot  well  be  preserved  if  the  members  stipulating 
for  benefits  were  not  required  to  consent  that  they  would 
be  subject  to  future  as  well  as  existing  by-laws.  Time  and 
experience  will  develop  a  necessity  for  changes  in  the  laws, 
and  if  the  consent  was  not  required,  there  would  be  a  class 
of  members  bound  by  the  changed  laws,  and  a  class  ex- 
empt from  their  operation."^®^  Where  the  alteration  is 
regularly  made,  with  the  object  of  promoting  the  welfare 
of  the  oi^anization,  and  the  change  operates  equally  up- 
on all  the  members,  no  wrong  is  done  any  member.     "It 

western  B.  ft  M.  Aid  Ass'n  v.  Wanner  (1887)  24  111.  App.  358;  Pellaz- 
zino  V.  German  Catholic  St.  J.  Soc.  (1886)  16  Wkly.  Law  Bui.  (Ohio) 
27;  Revere  v.  Boston  Copper  Co.  (1834)  15  Pick.  (Mass.)  363;  Becker 
V.  Farmers'  Mnt  Fire  Ins.  Co.  (1882)  48  Mich.  610.  In  Pokrefky  v.  De- 
troit Firemen's  Fund  Ass'n  (1899)  121  Mich.  456,  80  N.  W.  240,  it  is 
suggested  that  the  fact  that  the  directors  made  the  by-laws  was  a 
reason  "frhy  a  member  should  not  be  affected  by  a  subsequent  altera- 
tion, 
lei  Supreme  Conunandery  t.  Ainsworth  (18S2)  71  Ala.  449. 

(150) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  127 

may  sometimes  happen  that  the  interests  of  an  individual, 
or  of  a  few  individuals,  may  be  impaired ;  but  it  is  the  right, 
and,  indeed,  the  duty,  of  the  society  to  protect  the  inter- 
ests of  the  many,  rather  than  of  the  few."^®^ 

Same — Slight  changes. 

§  127.  An  effort  has  been  made  by  some  courts  to  place 
the  limit  of  subsequent  alteration  at  slight  changes  or  mere 
regulations  not  affecting  the  substance  of  the  contract. 
The  theory  of  such  cases  is  that,  while  it  would  not  be  rea- 
sonable to  extend  this  power  so  as  to  authorize  a  change 
in  the  essential  character  of  the  original  contract,  yet  a 
slight  change  more  or  less  affecting  the  remedy  of  the 
member  may  well  be  binding.^ ^^  But  this  theory  presents 
no  tangible  distinction  on  principle.  "The  court  would 
have,  in  each  case,  to  examine  the  subject  to  which  the  al- 
teration applied,  and  to  say  whether  it  was  material  or 
trifling,  and  so  binding  or  not  binding.  That  would  be  to 
embark  on  a  diflScult  course;  and  where  would  the  court 
draw  the  line?'"®^  But  the  other  extreme  of  this  proposi- 
tion, i.  e.,  the  possibility  of  an  entire  deprivation  of  rights 
under  the  power  to  alter,  is  excluded  by  the  language  of 

lez  Supreme  Lodge,  K.  of  P.,  v.  Knight  (1889)  117  Ind.  489,  20  N. 
E.  479. 

163  Engelhardt  v.  Fifth  Ward  P.  D.  S.  &  L.  Ass'n  (1896)  148  N.  Y.  281, 
42  N.  E.  710;  Bearden  v.  People's  B.,  L.  &  S.  Ass'n  (Tenn.  Ch.  App.; 
1898)  49  S.  W.  64.  And  see  Northwestern  B.  &  M.  Aid  Ass'n  v.  Wan- 
ner (1887)  24  m.  App.  368. 

M4  Fepe  y.  City  &  Subiui>asx  P.  B.  Soc.  [1893]  2  Ch.  311. 

(151) 


§  128  BY-LAWS.  [Ch.  5 

many  of  the  cases.*'*  A  recent  case  in  Oregon  is  in  point. 
There  a  subsequent  by-law  limited  the  designation  of  bene- 
ficiaries of  the  fund  due  upon  a  member's  death  to  mem- 
bers of  the  family,  blood  relations,  or  persons  dependent 
upon  the  member.  The  court  held  that  the  by-law  was 
not  binding  upon  a  member  who  had  no  family,  blood  rela- 
tions, or  persons  dependent  upon  him.^^^ 

Same — Vested  rights. 

§  128.  Finally,  many  of  the  cases  draw  the  line  at  the 
impairment  of  vested  rights.  It  is  said  that  the  power  to 
alter  the  by-laws  resides  in  the  corporation  for  the  pur- 
pose of  carrying  out  the  objects  for  which  it  was  formed, 
and  that  a  member's  contract  of  insurance  may  be  modi- 
fied or  varied  by  subsequent  by-laws,  either  through  the  re- 
served power  in  the  corporation  to  enact  such  by-laws,  or 
by  his  contract  with  reference  to  future  enactments;  but 
this  will  not  be  construed  as  intending  to  reserve  the  power 
to  impair  vested  rights.^  ®'^    The  right  to  modify  a  contract, 

165  Supreme  Lodge,  K.  of  P.,  v.  Knight  (1889)  117  Ind.  489,  20  N. 
E.  479;  Supreme  Commandery  v.  Ainsworth  (1882)  71  Ala.  445. 

166  Wist  V.  Grand  Lodge,  A.  O.  U.  W.  (1892)  22  Or.  271,  29  Pac.  610. 
See,  also,  Louisville  German  B.  &  L.  Ass'n  v.  Wissing  (1882)  4  Ky. 
Law  Rep.  443,  where  it  was  held  the  repeal  of  a  provision  for  with- 
drawal and  fixing  the  withdrawal  value  of  shares  was  void  so  far  as 
it  attempted  to  release  the  association  from  its  obligation  to  purchase 
the  stock  of  withdrawing  members. 

167  Becker  v.  Berlin  Ben.  Soc.  (1891)  144  Pa.  St.  232,  22  Atl.  699; 
Pellazzino  v.  German  Catholic  St.  J.  Soc.  (1886)  16  Wkly.  Law  Bui. 
(Ohio)  27;  Holyoke  B.  &  L.  Ass'n  v.  Lewis  (1891)  1  Colo.  App.  127,  27 
Pac.  872;  Kent  v.  Quicksilver  Mining  Co.  (1879)  78  N.  Y.  159;  Savage 
V.  People's  B.,  L.  &  S.  Ass'n  (1898)  45  W.  Va.  275,  31  S.  E.  991;  Enter- 
(152) 


Oh.    S]  EFFECT  OF  BY-LAWS.  §  128 

it  is  said,  does  not  include  the  right  to  repudiate  a  debt, 
any  more  than  the  reserved  right  of  the  legislature  to  re- 
peal the  charter  of  a  corporation  gives  the  right  to  con- 
fiscate its  property.^^^  But  it  has  been  objected  that  this 
does  not  settle  the  question,  for  such  vested  rights  as  exist 
are  subject  to  the  still-existing  power  to  alter  the  by-laws^ 
so  that  the  proposition  assumes  this  form,  that  there  is  a 
vested  right  liable  to  be  divested  by  any  later  by-law  duly 
enacted.^ ^*  And  in  a  late  English  case  the  court  said,  in 
answer  to  the  argument  that  the  power  of  alteration  was 
limited  to  such  changes  as  would  not  interfere  with  vested 
rights,  that  there  was  no  ground  for  introducing  any  such 
limitation  into  the  contract.  "Where  the  only  contract 
between  the  society  and  the  member  is  the  original  con- 
tract under  which  he  became  a  member,"  said  the  court, 
"and  that,  as  is  the  case  here,  provides  for  alterations  of 
the  rules,  he  is  bound  by  any  subsequent  alteration  that 
may  be  made  within  the  power  of  alteration,  whatever  the 
extent  of  that  alteration  may  be."^^® 

prise  B.  &  L.  Soc.  v.  Bolin  (1898)  12  Colo.  App.  304,  55  Pac.  740;  Coyle 
V.  Father  Matthew  T.  A.  B.  Soc.  (1883)  17  Wkly.  Dig.  (N.  Y.)  17;  Graf- 
strom  V.  Frost  Council,  No.  21  (1897)  19  Misc.  Rep.  180,  43  N.  Y.  Supp. 
266.  And  see,  also,  on  vested  rights  in  general,  Becker  v.  Farmers' 
Mut.  Fire  Ins.  Co.  (1882)  48  Mich.  610;  Hamilton  Mut.  Ins.  Co.  v.  Ho- 
bart  (1854)  2  Gray  (Mass.)  543;  Great  Falls  Mut.  Fire  Ins.  Co.  v.  Har- 
vey (1864)  45  N.  H.  292. 

168  Pellazzino  v.  German  Catholic  St.  J.  Soc.   (1886)   16  Wkly.  Law 
Bui.    (Ohio)    27. 

leapepe  v.  City  &  Suburban  P.  B.  Soc.  [1893]  2  Ch.  311. 

170  Smith  V.  Galloway  [1898]  1  Q.  B.  71. 

(153) 


§  129  BY-LAWS.  [Ch.    5 

Same — ^What  are  vested  rights. 

§  129.  Nor  are  the  authorities  agreed  as  to  what  con- 
stitutes a  vested  right  in  this  class  of  cases.  Many  of  the 
cases  above  cited  in  support  of  the  inviolability  of  vested 
rights  are  cases  in  which  sick  benefits  were  reduced  while 
a  member  was  ill  and  drawing  his  benefit.  The  member's 
right  was  held  to  have  become  vested  by  his  illness,  and 
was  not  thereafter  subject  to  alteration.  But  in  opposi- 
tion to  this  view  it  has  been  pointed  out  that  the  term 
"vested  right"  is  often  loosely  used.  In  a  sense,  every 
right  is  vested;  for  if  a  person  has  a  right  at  all,  it  must 
vest  in  him.  But  if  the  by-laws  as  they  exist-ed  when  the 
members  joined  constituted  a  contract  that  he  should  be 
paid  at  a  certain  rate  in  case  of  illness,  then  that  contract 
existed  just  as  much  before  his  illness  as  afterwards.  Un- 
der the  contract,  nothing  was  due  before  the  illness  actual- 
ly occurred, — benefits  do  not  accrue  for  future  illness. 
The  right  of  a  sick  member  to  benefits  for  future  illness  is 
not  different  in  its  nature  from  the  right  of  the  well  mem- 
bers to  benefits  for  future  illness.  In  one  case,  the  mem- 
bers have  a  right  to  future  payments  in  case  they  become 
sick;  in  the  other,  the  sick  member  has  a  right  to  future 
payments  in  case  he  continues  sick.  And  if  there  was  no 
power  to  change  the  by-law  in  the  one  case,  there  was  no 
power  to  change  it  in  the  other,  which  is  equivalent  to  say- 
ing that  there  was  no  power  to  change  it  at  all.  In  other 
words,  if  the  by-laws  formed  an  unconditional  contract  for 
the  payment  of  a  fixed  benefit  in  case  of  illness,  it  had  that 
character  before  a  member  became  sick ;  and  if  it  cannot  be 
(154) 


Ch.  5]  EFFECT  OF  BY-LAWS.  §  129 

changed  after  the  illness,  it  follows  that  it  cannot  be 
changed  before.^ '^^  As  the  supreme  court  of  Massachu- 
setts has  recently  said,  in  such  a  case,  the  member  "had 
agreed  that  these  changes  ♦  ♦  ♦  should  be  binding 
upon  him,  not  as  a  new  contract,  but  as  part  of  the  old 
contract,  and  under  its  provisions.  But  the  plaintiff  con- 
tends that  there  is  an  implied  limit  to  the  power  of  amend- 
ment, that  it  cannot  be  made  so  as  to  deprive  him  of  a  vest- 
ed right,  and  that  his  right  to  the  benefit  became  fixed  by 
his  disability,  and  can  never  be  changed  during  that  dis- 
ability. But  how  does  the  right  become  fixed?  There  is 
no  such  restriction  contained  in  the  words  expressing  the 
power  of  amendment.  To  thus  restrict  the  power  would 
be  to  divide  the  society  into  two  classes.  *  ♦  ♦  There 
can  be  no  right  to  future  benefits  vested  in  one  member 
more  than  in  another.  The  right  of  a  sick  member  to  fu- 
ture benefits,  which  became  vested  in  the  plaintiff  at  the 
time  of  the  disability,  is  not  a  right  to  receive,  so  long  as 
such  disability  continues,  the  future  benefits  provided  by 
the  by-law  existing  at  the  time  the  disability  begins,  but 
simply  a  right  to  receive  them  subject  to  such  changes  as 
may  be  made  by  the  society.  •  *  *  Such  a  change  is 
not  a  repudiation  of,  but,  on  the  contrary,  is  in  accord 
with,  the  terms  of  the  contract."^  ^^ 

iTi  Stohr  V.  San  Francisco  M.  F.  Soc.  (1890)  82  Cal.  557,  22  Pac.  1125; 
Poultney  v.  Bachman  (1883)  31  Hun  (N.  Y.)  49.  And  see  Fugure  v. 
Mutual  Society  of  St.  Josepli  (1874)  46  Vt.  369;  McCabe  v.  Father 
Matthew  T.  A.  B.  Soc.  (1881)  24  Hun  (N.  Y.)  149;  Gundlach  v.  Ger- 
mania  Mechanics'  Ass'n  (1875)  49  How.  Pr.  (N.  Y.)  190. 

172  Pain  V.  Societe  St.  Jean  Baptiste  (1899)  172  Mass.  319,  52  N.  E. 
502. 

(155) 


§  130  BY-LAWS.  [Oh.  5 

Same — Same. 

§  130.  What  constitutes  a  real  vested  right,  which  it 
is  beyond  the  power  of  alteration  to  impair,  is  illustrated 
by  a  recent  case  in  the  federal  courts,  in  which  it  appeared 
that  a  subsequent  by-law  of  a  mutual  insurance  company 
reduced  the  amount  recoverable  on  its  policies  in  case  the 
death  of  the  insured  should  be  caused  or  superinduced  by 
the  use  of  intoxicating  liquors.  It  was  held  that  the  case 
turned  upon  the  question  whether  the  disease,  which  was 
admitted  to  have  been  superinduced  by  the  use  of  intoxi- 
cating liquors,  became  seated  in  fatal  and  incurable  form 
before  or  after  the  by-law  took  effect.  The  reserved  right 
to  enact  future  by-laws  is  well  recognized,  the  court  said, 
"as  authorizing  it  to  subject  members  to  further  require- 
ments and  conditions  of  future  liability  by  reasonable  en- 
actments within  the  objects  and  for  the  general  welfare 
of  the  association,  and  to  apply  the  regulations  to  prior 
contracts,  but  to  the  extent  only  that  the  conditions  thus 
imposed  arise  after  the  enactment.  No  authority  vests  in 
the  association  to  repudiate  obligations  as  insurer  which 
have  become  vested  under  the  contract;  and  the  by-law 
which  imposes  a  new  condition,  or  exempts  from  liability 
for  a  cause  of  death  previously  within  the  insurance,  can- 
not be  made  retroactive  to  impair  or  destroy  liability  for 
a  pre-existing  cause  which  arose  under  the  contract."^'^ 

173  Lloyd  V.  Supreme  Lodge,  K.  of  P.  (1899)  38  C.  C.  A.  654.  98  Fed. 
66.  And  see  the  dictum  of  the  supreme  court  of  Massachusetts  in  the 
Pain  Case,  172  Mass.  319,  52  N.  E.  502:  "Of  course  no  amendment 
could  change  the  amount  of  any  benefit  which,   under  any  by-law, 

(156) 


Ch.   SJ  BFFBOT  OF  BY-LAWS.  §  132 

Same — Acquiescence  and  beneficial  alterations. 

§  131.  Since  a  member's  relation  to  the  organization 
ifi  a  contract  relation,  it  follows  that  his  rights  are  not  af- 
fected by  a  subsequent  statute  which  has  not  been  adopted 
as  a  by-law.^'*  A  member  may  always  submit  to  an 
amended  by-law,  and  thereby  be  bound  by  it.^'^'^  Of  course 
a  subsequent  alteration  may  operate  beneficially  as  well  as 
adversely;  hence  a  subsequent  by-law  increasing  the 
amount  payable  upon  a  member's  death  applies  to  those 
who  were  members  at  the  time  of  its  passage,  as  well  as  to 
those  subsequently  becoming  such.^'® 

Ok  Thibd  Pebsons. 
Hot  binding  on  strangers. 

§  132.  When  we  come  to  the  question  of  the  effect  of 
the  by-laws  of  a  corporation  upon  strangers  to  the  corpora- 
tion, we  find  a  subject  of  some  diflaculty,  in  regard  to  which 
there  are  conflicting  views.     The  general  principle  that 

has  passed  from  a  possible  to  that  of  a  future  benefit  [and  has  become 
a  debt].  The  right  becomes  vested  absolutely  as  the  time  expires  for 
which  the  benefit  is  granted."  Also  the  statement  in  Stohr  v.  San 
Francisco  M.  F.  Soc.  (1890)  82  Cal.  557,  22  Pac.  1125:  "The  cases 
where  a  specific  sum  becomes  due  upon  the  happening  of  a  certain 
event,  as  upon  death,  are  not  like  the  present.  In  such  cases,  an  al- 
teration in  the  contract  cannot  be  made  after  the  fact,  for  that  would 
be  to  make  that  not  due  which  had  already  become  due." 

1'*  Knights  Templars'  &  M.  L.  Ind.  Co.  v.  Jarman  (1900)  44  C.  C.  A. 
93,  104  Fed.  638;  Baldwin  v.  Begley  (1900)  185  111.  180,  56  N,  E.  1065. 
But  see  Hysinger  y.  Supreme  Lodge,  K.  &  L.  of  H.  (1890)  42  Mo.  App. 
627. 

"openachio  v.  Saati  Society  (1900)  67  N.  Y.  Supp.  140. 

i'«  Lavigneur  v.  L'Union  Mutuelle  (1900)  16  Rap.  Jud.  Que.  C.  S.  588. 

ri57> 


§  133  BY-LAWS.  [Ch.    5 

corporation  by-laws  bind  only  those  who  have  consented  to 
them  applies  here  as  well  as  elsewhere,  and  it  is  upon  this 
consent  that  the  power  of  the  by-laws  to  affect  third  per- 
sons is  based.  Sometimes  this  consent  is  evidenced  by  a 
written  agreement,  as  in  the  case  of  a  person  taking  out  an 
insurance  policy  in  a  mutual  company  wherein  he  agrees 
to  be  bound  by  the  by-laws  of  the  company,  and  sometimes 
it  is  evidenced  by  signature  to  the  by-laws,  as  in  the  case 
of  a  depositor  in  a  savings  bank  who  signs  the  by-laws 
printed  in  his  pass-book.  In  such  cases,  the  person  assent- 
ing to  the  by-laws  is  of  course  bound  by  them  by  virtue  of 
his  express  contract.^ ^' 

Illustrations. 

§  133.  Thus,  a  depositor  in  a  savings  bank  who  has 
subscribed  to  its  by-laws  is  bound  by  a  by-law  providing 
that  the  bank  will  not  be  liable  for  losses  caused  by  pay- 
ment to  one  in  possession  of  the  depositor's  pass-book, 
where  the  latter  has  not  notified  the  bank  that  the  book 
was  lost  or  stolen.^'^^  But  it  has  been  held  that  such  a  by- 
law was  not  binding  on  a  depositor  who  had  no  notice 
thereof.^  ^^  Even  in  case  of  express  consent,  the  person 
assenting  is  not,  as  a  general  rule,  bound  by  by-laws  after- 
wards passed,  and  of  which  he  has  no  notice.^^" 

Under  a  statute  providing  that  by-laws  must  be  posted 

177  Appleby  v.  Erie  County  Savings  Bank  (1875)  62  N.  Y.  17. 

178  Sullivan  v.  Lewiston  Inst,  of  Savings  (1869)  56  Me.  507. 

179  Ackenhausen  v.  People's  Savings  Bank  (1896)   110  Mich.  175,  68 
N.  W.  118. 

iRo  Kimins  y.  Boston  Five  Cent  Savings  Bank  (1886)  141  Mass.  33, 

<158) 


i'Jh.  5]  EFFECT  OF  BY-LAWS.  §  134 

in  the  corporation's  principal  place  of  business,  a  by-law 
creating  a  lien  on  the  stock  which  has  not  been  thiis  posted 
cannot  affect  the  rights  of  a  purchaser  of  stock  who  had 
no  actual  notice  of  it  at  the  time  of  his  purchase.**^  And 
a  by-law  made  by  a  bridge  corporation,  under  authority  of 
statute,  imposing  a  penalty  for  riding  or  driving  over  the 
bridge  faster  than  a  walk,  is  not  binding  on  a  person  hav- 
ing no  notice  thereof,  unless  posted  at  each  end  of  the 
bridge,  as  required  by  the  statute.  ^^^  One  who  is  not  a 
member  of  a  corporation  cannot  object  to  its  by-laws  regu- 
lating eligibility  to  membership,  and  governing  the  con- 
duct of  members.^^* 

Implied  assent  sufficient. 

§  134.  Since  by-laws  cannot  interfere  with  the  rights 
and  privileges  of  third  persons  without  their  consent,^**  it 
is  always  necessary  to  show  assent  of  some  kind  in  order  to 
make  them  binding  as  to  such  third  persons ;  but  this  con- 
sent need  not  necessarily  be  expressed.  Where  a  person 
has  voluntarily  entered  into  some  business  transaction 
with  a  corporation,  with  actual  notice  of  the  by-laws  of  the 
corporation,  he  certainly  impliedly  agrees  to  be  bound  by 
such  by-laws,  since  he  knows  that  a  corporation  can  only 
legally  act  in  accordance  with  its  by-laws.     This  principle 

181  Des  Moines  Nat.  Bank  v.  Warren  County  Bank  (1896)  97  Iowa 
204,  66  N.  W.  154. 

182  Worcester  v.  Essex  Merrimac  Bridge  Corp.  (1856)  73  Mass.  457. 

183  American  L.  S.  C.  Co.  v.  Chicago  L.  S.  Exchange  (1892)  143  m 
210,  32  N.  B.  274. 

18*  Gordon  v.  Muchler  (1882)  34  La.  Ann.  606. 

(159) 


§  135  BY-LAWS.  [Ch.  5 

however,  would  not  apply  where  the  transaction  is  such  as 
to  constitute  a  waiver  of  the  by-law  on  the  part  of  the  cor- 
poration.^®^ But  where  the  person  dealing  with  the  cor- 
poration has  no  notice,  either  actual  or  constructive,  of  the 
terms  of  its  by-laws,  he  is  not  bound  by  them.^*®  And  the 
mere  fact  that  he  is  dealing  with  a  corporation  that  pos- 
sesses power  to  make  by-laws  does  not  operate  as  construc- 
tive notice  to  hira  of  the  terms  of  such  by-laws,  for  if  it  did, 
the  question  whether  or  not  he  had  notice  of  the  by-laws 
would  never  arise. 

Who  is  stranger. 

§  135.  It  has  been  held  in  New  Jersey  that  a  stranger, 
to  whom  a  policy  of  fire  insurance  issued  by  a  mutual  com- 
pany has  been  assigned,  is  considered  as  a  third  person,  and 
not  as  a  member  of  the  company,  and  is  therefore  not 
chargeable  with  notice  of  the  company's  by-laws.^®''^  On 
the  other  hand,  it  has  been  held  in  Indiana  that  a  bene- 
ficiary of  a  life  insurance  policy,  issued  by  a  mutual  so- 
ciety, is  chargeable  with  notice  of  the  by-laws.^*®     In  a 

185  Samuel  v.  Holladay  (1869)  1  Woolw.  400,  Fed.  Cas.  No.  12,288,  1 
Am.  Corp.  Cas.  139;  Samuels  v.  Holliday  (1868)  McCahon  (Kan.)  214; 
Martino  v.  Commerce  Fire  Ins.  Co.  (1881)  47  N.  Y.  Super.  Ct.  520. 

188  In  re  Asiatic  Banking  Corp.  (1869)  L.  R.  4  Ch.  252;  Bank  of 
Holly  Springs  v.  Pinson  (1880)  58  Miss.  436;  Ward  v.  Johnson  (1880) 
95  111.  248,  6  Am.  Corp.  Cas.  462;  Barnes  v.  Black  Diamond  Coal  Co. 
(1898)  101  Tenn.  354,  47  S.  W.  498;  Arapahoe  C.  &  L.  Co.  v.  Stevens 
(1889)  13  Colo.  534,  540,  22  Pac.  825. 

18T  Miller  v.  Hillsborough  Mut.  Fire  Assur.  Ass'n  (1888)  44  N.  J.  Eg. 
224,  14  Atl.  278. 

1*8  Gray  v.  Supreme  Lodge,  K.  of  H.  (1889)  118  Ind.  293,  20  N.  E.  833. 
(160) 


Ch.   5]  EFFECT  OF  BY-LAWS.  §   136 

case  in  California  it  was  held  that  a  purchaser  of  stock 
was  not  chargeable  with  notice  of  a  by-law  making  all 
transfers  of  stock  subject  to  all  debts  and  equities  in  favor 
of  the  corporation.^**  This  was  a  case  where  the  purchas- 
er had  no  actual  notice  of  the  by-law,  and  never  had  tried 
to  obtain  any  knowledge  on  the  subject,  though  he  might, 
by  inquiry,  have  learned  all  about  the  by-law  in  question. 

What  is  implied  notice. 

§  136.  The  rule  has  been  laid  down  by  the  supreme 
court  of  appeals  of  Virginia,  that  persons  dealing  with  a 
corporation  are  afiPected  with  notice  of  the  provisions  of 
its  by-laws,^ ^*^  but  this  statement  seems  to  be  a  little  too 
sweeping.  A  more  carefully  guarded  statement  of  the  rule 
governing  such  cases  has  been  laid  down  in  two  cases, — 
one  in  Maine  and  the  other  in  New  York, — in  which  it  is 
said  that  the  by-laws  of  a  corporation  are  binding  on  its 
members,  and  also  on  others  acquainted  with  its  methods 
of  doing  business  ;^^^  that  is  to  say,  that  persons  dealing 
with  the  cori)oration  are  not  presumed,  from  the  mere  fact 
of  their  having  dealings  with  it,  to  know  all  about  its  by- 
laws, but  if  they  know  the  general  course  of  business  pur- 
sued by  the  corporation,  that  would  be  sufficient  to  put 

i«»  Anglo-Californian  Bank  v.  Grangers'  Bank  (1883)  63  Cal.  359. 

190  Davis  V.  Rockingham  Inv.  Co.  (1892)  89  Va.  290,  15  S.  E.  547;  Bo- 
cock's  Bx'r  V.  Alleghany  C.  &  I.  Co.  (1887)  82  Va.  913;  Haden  v.  Farm- 
ers' &  Mechanics'  Fire  Ass'n  (1885)  80  Va.  683. 

181  Cummings  v.  Webster  (1857)  43  Me.  197;  Driscoll  v.  West  Brad- 
ley &  C.  M.  Co.  (1874)  59  N.  Y.  101.  See,  too,  Metropole  B.  &  T. 
Bath  Co.  V.  Garden  City  Fan  Co.  (1894)  50  111.  App.  681,  683. 

(161) 
Boisot  By  Laws — 11. 


§  3  38  BY-LAWS.  [Ch.  5 

them  on  inquiry  as  to  whether  or  not  such  couree  of  busi- 
ness was  controlled  by  the  by-laws.  It  has  been  held  in 
England  that  a  person  employing  a  broker  to  sell  shares 
on  the  stock  exchange  is  bound  to  indemnify  the  latter  for 
any  liability  he  may  incur  under  reasonable  rules  of  the 
exchange.^  ^* 

LimitatKHis  of  power  of  officers. 

§  137.  Litigation  as  to  the  effect  of  corporate  by-laws 
upon  third  persons  often  arises  in  connection  with  by-laws 
that  limit  and  define  the  powers  of  the  corporate  officers. 
All  contracts  made  with  the  corporation  must  necessarily 
be  made  with  its  officers  or  agents,  since  that  is  the  only 
way  in  which  a  corporation  can  transact  business.  And 
so  the  question  arises  whether  a  person  who  enters  into  a 
contract  with  an  officer  of  the  corporation,  on  behalf  of  the 
corporation,  is  bound  at  his  peril  to  know  the  extent  of  that 
officer's  authority  as  contained  in  the  by-laws,  and  whether 
the  corporation  can  escape  a  liability  created  by  such  trans- 
action on  the  ground  that  the  officer  in  entering  into  the 
agreement  exceeded  his  authority. 

The  rule  in  New  York. 

§  138.  The  courts  of  New  York,  in  answering  this  ques- 
tion, in  some  of  the  earlier  cases,  laid  down  the  doctrine 
til  at  persons  dealing  with  the  officers  of  a  corporation  are 
chargeable  with  notice  of  their  authority,  and  of  the  limita- 
tions and  restrictions  upon  it  contained  in  the  by-laws.^ ^ 

192  Smith  V.  Reynolds  (1892)  66  Law  T.  (N.  S.)  808. 
i»3  Adriance  v.  Roome  (1868)  52  Barb.  (N.  Y.)  411;  Dabney  v.  Stevens 
(162) 


Ch.    5]  EFFECT  OF  BY-LAWS.  §  138 

But  later  cases  hold  that  a  corporation  cannot  escape  the 
effect  of  a  contract  made  by  its  president,  on  the  plea  that 
the  by-laws  vested  anthority  to  make  snch  contracts  solely 
in  anotlier  officer,  where  knowledge  of  the  by-law  is  not 
brought  home  to  the  other  party,  and  the  act  of  the  presi- 
dent was  within  the  apparent  scope  of  his  anthority,  and 
for  a  purpose  directly  connected  w\^h  the  company's  Inti- 
mate business  ;^^^  and  the  fact  that  a  note  made  by  the 
president  of  a  corporation  was  not  signed  by  the  treasorer 
in  accordance  with  the  by-laws  is  no  defence  in  ihe  hands 
of  a  bona  fide  holder,  the  corporation  haying  i«c«ved  the 
benefit  of  the  proceeds.^®'  The  prevailing  doctrtne  was 
clearly  stated  by  the  New  York  court  of  appeals  in  a  recent 
case  as  follows:  "By-laws  of  business  corporations  are, 
as  to  third  persons,  private  regulations  binding  as  between 
the  corporation  and  its  members  on  third  persons  having 
knowledge  of  them,  but  of  no  f(MPce  as  limitations  per  se,  as 
to  third  persons,  of  an  authority  which,  except  for  the  In- 
laws, would  be  construed  as  within  the  apparent  seofie  <rf 
the  agency."  ^** 

(1870)  2  Sweeney  (N.  Y.)  415;  De  Boat  t.  Albert  Palmer  Co.  (1885)  1 
How.  Pr.  (N.  S.;  N.  Y.)  601.  And  see  Bohm  t.  Loew^r's  G.  B.  Oo. 
(1890)  9  N.  Y.  Supp.  514;  Fifth  Nat.  Bank  ▼.  Navaasa  Pboephato  Ca 
(1890)  119  N.  Y.  256. 

194  Smith  V.  Martin  Anti-Fire  Car  Heater  Oo.  (1898)  19  N.  T.  Sopii. 
285.  See,  ahso.  Perry  v.  (Council  Blnfle  Caty  Watarworfcs  Co.  (1893) 
67  Hun,  456,  22  N.  Y.  Supp.  151. 

i»5  National  Spraker  Bank  v.  Qeorge  C.  Tveadwell  Co.  (1894)  80  Hoa, 
363,  30  N.  Y.  SaK>.  77;  Grant  v.  (3«or©»  C.  Trttadw«Il  Co.  (1894)  81 
Hun,  591,  31  N.  Y.  Supp.  702. 

i»6Rathbun  r.  Snow   (1890)   123  N.  Y.  941. 

(163) 


§  140  BY-LAWS.  [Ch.    5 

The  rule  in  Massachusetts — Bona  fide  dealers  not  affected. 

§  139.  In  Massachusetts  it  is  held  that  the  enumeration 
in  the  by-laws  of  certain  specified  powers  bestowed  upon 
the  officers  does  not,  as  regards  third  persons,  prevent  such 
officers  from  binding  the  corporation  by  acts  which,  though 
not  within  the  enumerated  powers,  are  within  the  authority 
which  the  titles  of  the  officers  usually  imply.^'^  So,  under 
the  Massachusetts  rule,  a  person  making  a  contract  with 
the  president  of  a  corporation  upon  a  subject  in  regard  to 
which  presidents  of  corporations  ordinarily  have  power  to 
contract  for  their  corporations,  may  hold  the  corporation 
to  such  contract,  although,  according  to  the  by-laws,  he  had 
no  power  to  enter  into  a  contract.  This,  of  course,  is  upon 
the  assumption  that  the  person  had  no  actual  knowledge  in 
regard  to  the  by-laws  upon  that  subject.  And  the  same 
rule  is  in  force  in  Colorado.^ ^^ 

The  rule  in  Illinois — Same. 

§  140.  In  Illinois,  also,  the  courts  have  consistently 
held  that  third  persons  dealing  in  good  faith  with  the  cor- 
porate officers  in  reliance  upon  their  apparent  power  can- 
not be  affected  by  the  failure  of  the  officers  to  observe  the 
rules  and  regulations  enacted  for  the  internal  manage- 
ment of  the  corporate  affairs.^^*    The  reason  given  for  this 

i»7Fay  V.  Noble  (1853)  12  Gush.  (Mass.)  1;  Emery  v.  Boston  Marine 
Ins.  Co.  (1885)  138  Mass.  412. 

i»8  Arapahoe  C.  &  L.  Co.  v.  Stevens  (1889)  13  Colo.  534,  540,  22  Pac. 
825. 

i»»  Ashley  Wire  Co.  v.  Illinois  Steel  Ck>.  (1896)  164  111.  149,  45  N.  E. 
410;  Atwater  v.  American  Exch.  Nat.  Bank  (1893)  162  111.  605,  38  N. 
(164) 


Cll.    5]  EFFECT  OF  BY-LAWS.  g  141 

doctrine  is  that  the  by-laws  "are  private  and  only  accessi- 
ble to  the  officers  of  the  company."  This  was  said  in  a 
case  where  a  deed  had  been  executed  by  the  president  of  a 
railroad  company  in  behalf  of  the  company.  The  by-laws 
required  that  all  deeds  should  be  countersigned  by  the  sec- 
retary, but  the  court  held  that  the  deed  in  question,  al- 
though it  was  not  so  countersigned,  was  valid,  since  the 
charter  did  not  require  it  to  be  countersigned  by  the  secre- 
tary, and  the  purchaser  was  not  required  to  know  the  pro- 
visions of  the  by-laws.^**®  In  a  case  in  Missouri,  a  purchase 
by  the  officers  of  the  corporation  in  excess  of  their  powers 
as  limited  in  the  by-laws  was  held  valid,  the  seller  having^ 
no  actual  knowledge  of  the  by-laws.^®^ 

Assigfnment  of  shares  contrary  to  by-law. 

§  141.  A  pledgee  of  stock  evidenced  by  a  certificate  on 
which  is  printed  a  by-law  which  prohibits  transfers  of  stock 
while  the  owner  is  indebted  to  the  corporation  takes  the 

E.  1017;  Trawick  v.  Peoria  &  Ft.  C.  St.  Ry.  Co.  (1896)  68  111.  App.  159; 
Metropole  B.  &  T.  Bath  Co.  v.  Garden  City  Fan  Co.  (1894)  50  111.  App. 
683. 

2«o  Smith  V.  Smith  (1872)  62  111.  496. 

201  Ten  Broek  t.  Winn  Boiler  Compound  Co.  (1885)  20  Mo.  App.  19. 
And  see  PeatnMm  t.  Centerville  L.  H.  &  P.  Co.  (1896)  100  Iowa,  245, 
69  N.  W.  541.  It  is  possible  that  this  rule  may  be  binding  upon  cor- 
porations by  virtue  of  estoppel.  The  corporation  which  has  appointed 
officers  whoae  titles,  such  as  president,  treasurer,  and  secretary,  have 
well-defined  meanings,  might  well  be  held  to  be  estopped  from  deny- 
ing that  sndi  ofScers  reaSy  have  the  powers  that  their  titles  imply 
so  far  as  concerns  third  persons  who  have  no  knowledge  of  the 
powers  of  tbo8«  officers  except  as  indicatad  by  their  official  titles. 

(166) 


§   142  BY-LAWa  [Ch.    5 

stock  subject  to  the  by-law,  since  the  recital  of  it  on  the 
certificate  is  ample  notice  to  him.^^^  And  the  statement  on 
the  stock  certificate  that  transfers  mnst  be  made  in  ac- 
cordance with  the  by-laws  is  notice  to  the  purchaser  of 
stock  of  the  provisicms  of  the  by-laws  on  that  subject.^*^^ 
But  a  provision  in  the  charter  of  a  corporation  authorizing 
the  directors  to  make  all  needful  by-laws  concerning  the 
mode  and  manner  of  transferring  stock  does  not  consti- 
tute constructiTe  notice  to  purchasers  of  stock  of  the  exist- 
ence of  a  by-law  which  provides  that  no  transfers  of  stock 
shall  be  made  by  any  stockholder  who  is  indebted  to  the 
eorporatk>nf  where  the  certificates  of  stock  merely  state 
that  they  are  transferable  at  the  office  of  the  corporation, 
in  person  or  by  attorney,  and  make  no  allusion  to  the  by- 
law«.***  An  assignee  of  scares  is  not  bound  by  a  by-law 
passed  without  authority,  to  which  his  assignor  assented, 
such  assent  being  a  personal  contract  with  the  assignor, 
and  enforceable  against  him  alone.^"*^  Nor  is  a  provision 
requiring  stock  to  be  first  offered  to  the  directors  before 
transfer  good  as  a  contractual  restriction  against  an  inno- 
cent purchaser  without  notice.^"® 

Rights  of  creditors. 

§  142.     Rights  of  creditors,  either  of  the  corporation 

202  State  Savings  Ass'n  v.  Nixon-Jones  Printing  Co.    (1887)   25   Mo. 
App.  642. 

203  In  re  Bachman  (1875)  12  Nat.  Bank.  Reg.  223,  2  Cent.  Law  J.  119. 

204  Bank  of  Holly  Springs  v.  Pinson  (1880)  58  Miss.  437. 

205  Ireland  v.  Globe  Milling  Co.  (1898)  21  R.  I.  9.  41  Atl.  258. 

206  Brinkerhoff-Farris  T.  &  S.   Co.  v.  Home  Lumber  Co.   (1893)   118 
(166) 


Ch.  5]  EFFECT  OF  BY-LAWS.  R   143 

itself  or  of  the  stockholders,  cannot  be  injurion-^ly  affected 
by  by-laws.  Thus,  no  by-law  passed  after  the  death  of  an 
insolvent  stockholder  can  affect  the  rights  of  his  creditors 
to  the  stock  owned  by  him  at  the  time  of  his  death,  since 
their  rights  have  become  vested  by  law  upon  his  death.^^ 
And  a  by-law  which  releases  stockholders  from  part  of 
their  liability  upon  their  stock  would  be  invalid  as  against 
the  creditors  of  the  corporation  where  the  corporation  is 
insolvent.^*'*  The  creditors  of  an  insolvent  corporation,  in 
relying  upon  a  by-law,  are  not  bound  by  what  the  officers 
and  directors  of  the  corporation  may  have  understood  the 
by-law  to  mean.^"^  A  by-law  of  a  bank  which  provides 
that  notes  discounted  by  the  bank  and  not  paid  at  maturity 
shall  be  charged  against  the  account  of  the  party  liable  on 
the  note  does  not  apply  to  the  case  of  a  depositor  who  haa 
not  assented  to  it.^^** 

Eights  of  third  persons  under  by-laws. 

§  143.  A  by-law  made  solely  for  the  benefit  of  the  cnp- 
poration  itself,  such  as  one  requiring  periodical  eyawinn- 
tions  of  its  affairs  by  its  directors,  does  not  confer  any 
rights  upon  third  persons,  and  such  a  by-law  does  not  in 
any  way  affect  their  contracts  with  the  corporation.-^* 

Mo.  447,  24  S.  W.  129.  See  McNulta  v.  Corn  Belt  Bank  (1897)  164 
111.  427,  45  N.  E.  954. 

207  Steamship  Dock  Co.  v.  Heron  (1866)  52  Pa.  St,  280. 

208  siee  V.  Bloom  (1822)  19  Johns.  (N.  Y.)  477. 

208  In  re  Bachman  (1875)  12  Nat.  Bank.   Reg.  227,  2  Cent.  Law  J.  119. 

210  Gordon  v.  Muehler  (1882)  34  La.  Ann.  606. 

211  State  V.  Atherton   (1867)   40  Mo.  209;   Morris  Canal  &  Banking 
Co.  V.  Van  Vorst  (1847)  21  N.  J.  Law,  100. 

(167) 


§   144  BY-LAWS.  [Ch.  5 

Where,  however,  an  incorporated  savings  bank  has  passed 
a  by-law  requiring  all  orders  for  money  to  be  witnessed,  the 
payment  of  money  upon  forged  orders  not  properly  wit- 
nessed would  give  the  depositor  a  right  of  action  against 
the  bank,  since  he  has  a  right  to  rely  on  the  published  by- 
laws as  to  the  mode  in  which  money  can  be  withdrawn.^*^ 
And  a  by-law  of  a  bank  that  all  payments  made  and  re- 
ceived must  be  examined  at  the  time  does  not  prevent  a 
party  dealing  with  the  bank  from  showing  afterwards  that 
there  was  a  mistake  in  his  account  of  deposits  and  receipts, 
since  by-laws  cannot  defeat  the  just  claims  of  third  per- 
sons.2^^  Where  the  by-laws  of  a  bank  prescribe  that  the 
treasurer  shall  notify  principal  and  sureties  personally  or 
in  writing  of  any  dues  unattended  to,  and  require  prompt 
payment  of  the  same,  failure  to  do  so  does  not  discharge 
the  sureties  on  a  note  due  the  bank.^^* 

Right  to  attack  by-laws. 

§  144.  A  person  whose  rights  in  regard  to  the  corpora- 
tion are  derived  under  its  by-laws  cannot  claim  rights  in- 
consistent with  the  by-laws,  on  the  theory  that  the  by-laws 
are  void.^*^  But  a  third  person  who  enters  into  a  contract 
with  a  corporation,  without  knowledge  of  its  by-laws,  does 
not  become  bound  by  such  by-laws,  so  far  as  that  particular 
contract  is  concerned,  by  afterward  becoming  a  member  of 

212  People's  Savings  Bank  v.  Cupps  (1879)  91  Pa.  St.  315. 

213  Mechanics'  &  Farmers'  Bank  v.  Smith  (1821)  19  Johns.  (N.  Y.) 
115;  Gallatin  v.  Bradford  (1808)  1  Bibb  (Ky.)  209. 

214  New  Hampshire  Savings  Bank  v.  Downing  (1844)  16  N.  H.  187. 
21-'  Rex  V.  College  of  Physicians  (1771)  5  Burrows,  2761. 

(1G8) 


Ch.    5]  EFFECT  OF  BY-LAWS.  §  145 

the  corporation.'^^®  This  was  held  in  a  case  where  a  cor- 
poration had  given  a  bond  conditioned  for  the  conveyance 
of  land.  The  by-laws  required  an  order  from  the  board  of 
directors  to  authorize  the  sale  of  land  by  the  company,  but 
the  purchaser  had  no  knowledge  of  this  by-law.  After  the 
bond  had  been  given,  and  before  the  time  for  receiving  the 
deed  had  come,  he  became  a  member  of  the  corporation. 
The  court  held  that  he  was  entitled  to  a  deed,  regardless 
of  the  restriction  contained  in  the  by-la w.^^' 

Beneficiary  bound  by  by-law. 

§  145.  Of  course  the  beneficiaries  named  in  a  benefit 
certificate  take  under  the  by-laws  f^^  and  where  a  member 
has  power  to  change  beneficiaries,  a  beneficiary  named  ac- 
quires no  vested  interest  in  the  benefit.^^®    But  it  has  been 

218  Wait  V.  Smith  (1879)  92  111.  385. 

21T  In  regard  to  the  distinction  in  this  respect  between  the  effect  of 
the  by-laws  as  against  members  and  as  against  strangers,  it  must  be 
remembered  that  each  member  of  a  corporation  has  a  legal  right  to 
inspect  all  the  corporate  records,  so  that,  if  he  is  ignorant  of  the  by- 
laws, it  is  willful  ignorance  on  his  part,  since  opportunities  of  ob- 
taining information  in  regard  to  the  by-laws  are  always  open  to  him. 
But  third  persons,  even  though  they  have  extensive  dealings  with  the 
corporation,  have  no  legal  right  to  inspect  any  of  the  corporate  records. 
Their  knowledge  of  the  by-laws  must  therefore  be  necessarily  confined 
to  what  the  corporation,  through  its  officers,  chooses  to  tell  them. 

218  Cotter  V.  Grand  Lodge,  A.  O.  U.  W.  (1899)  23  Mont.  82,  57  Pac. 
650;  Supreme  Tent,  K.  of  M.,  v.  Hammers  (1899)  81  111.  App.  560. 

2i9Sabin  v.  Phinney  (1892)  134  N.  Y.  423,  31  N.  E.  1087;  Supreme 
Council,  A.  L.  H.,  v.  Adams  (1895)  68  N.  H.  236,  44  Atl.  380;  Supreme 
Council,  C.  K.  of  A.,  v.  Morrison  (1889)  16  R.  I.  468,  17  Atl.  57;  Lane  t. 
Lane   (1897)   99  Tenn.  639,  42  S.  W.  1058;   Sofge  v.  Supreme  Lodge, 

(169) 


§  146  BY-LAWS.  (^Ch.    5 

held  that  by-laws  limiting  redress  to  the  tribunals  of  the 
society,  or  requiring  resort  thereto  as  a  condition  prece- 
dent to  an  appeal  to  the  courts,  are  not  binding  on  benefi- 
ciaries who  are  not  members.^^^  Where  a  member  has  the 
right  to  substitute  beneficiaries  on  surrendering  the  origi- 
nal certificate,  equity  will  not  allow  a  beneficiary  who  re- 
fuses to  surrender  the  certificate  to  profit  by  his  own  wrong, 
but,  as  between  the  rival  beneficiaries,  will  consider  the 
rules  complied  with.^^* 

Involiintary  relation  to  corporation. 

§  146.  In  regard  to  the  effect  of  by-laws  upon  third 
persons,  it  is  possible  that  a  distinction  ought  to  be  drawn 
between  those  who  have  voluntarily  and  those  who  have 
involuntarily  entered  into  relations  with  the  corporation. 
Thus,  a  person  who  of  his  own  accord  proceeds  to  do  busi- 
ness with  a  corporation  may  reasonably  be  held  to  a  stricter 
degree  of  accountability  to  its  by-laws  than  a  person  who 
becomes  connected  with  a  company  involuntarily;  as,  for 
example,  a  creditor  of  a  stockholder  who  acquires  rights  in 
the  stock  by  virtue  of  legal  proceedings  taken  to  collect  his 
debt.  In  the  former  case  the  party  went  into  the  transac- 
tion without  compulsion,  and  could,  without  loss,  have  re- 
fused to  go  into  it  if  he  had  been  unable  to  satisfy  himself 

K.  of  H.  (1897)  98  Tenn.  446,  39  S.  W.  853;  Catholic  Knights  v.  Kuhn 
(1892)  91  Tenn.  214,  18  S.  W.  385. 

22oGrimbley  v.  Harrold  (1899)  125  Cal.  24.  57  Pac.  558;  Dobson  v. 
Hall  (1892)  11  Pa.  Co.  Ct.  Rep.  532;  Strasser  v.  Staats  (1891)  59  Hub, 
143,  13  N.  Y.  Supp.  167. 

221  Jory  y.  Supreme  Council,  A.  L.  of  H.  (1894)  105  Cal.  20,  38  Pac 
624. 
(170) 


Ch.    5]  EFFEXTP  OF  BY-LAWS.  §  146 

in  regard  to  the  by-laws.  In  the  latter  ease,  the  party  was 
driven  into  a  business  relation  with  the  corporation  in  or- 
der to  collect  a  debt  which,  in  its  inception,  had  no  connec- 
tion with  the  corporation.  It  would  seem  just  that  in  the 
latter  class  of  cases  the  rule  of  constructive  notice  should 
be  less  freely  applied  than  in  the  former,  but  the  distine- 
taoo,  apparently,  has  not  yet  been  drawn  by  the  courts. 

(171) 


CHAPTER  VI. 

ENFORCEMENT  OF  BY-LAWS. 

§  147.  Right  to  provide  penalty. 

148.  Recovery  of  penalty. 

149.  Double  punishment. 

150.  Self-executing  by-laws. 

151.  Interference  by  courts. 

152.  Same — Corporate  tribunals. 

153.  Same — When  expulsion  will  be  reviewed. 

Right  to  provide  penalty. 

§  147.  The  right  of  a  corporation  to  pass  by-laws  bind- 
ing its  members  necessarily  implies  the  right  to  enforce 
in  some  way  obedience  to  such  by-laws.  Accordingly  it 
has  been  held  that  by-laws  may  provide  for  their  enforce- 
ment by  means  of  pecuniary  penalties  or  corporate  disa- 
bilities/ subject  to  the  rule  that  the  penalties  must  in  all 
cases  be  proportionate  to  the  offense.^  The  corporate  dis- 
abilities usually  inflicted  are  suspension  or  expulsion. 
Pecuniary  penalties  may  be  collected  by  deducting  them 
from  the  dividends  of  the  offending  members,^  or  by  suit 
in  the  name  of  the  corporation  or  its  officers.* 

1  Palmetto  Lodge  v.  Hubbell  (1848)  2  Strob.  (S,  C.)  467.  49  Am.  Dec. 
604. 

zCahill  V.  KalamaBOO  Mut.  Ins.  Co.  (1845)  2  Doug.  (Micli.)  138,  43 
Am.  Dec.  462. 

«  Child  V.  Hudson's  Bay  CJo.  (1723)  2  P.  Wms.  208. 

4  Graves  v.  Colby  (1838)  9  Adol.  &  E.  356;  Peltmakers  v.  Davis  (1797) 

(172) 


Ch.   6]  ENFORCEMENT  OF  BY-LAWS.  §  149 

Recovery  of  penalty. 

§  148.  Where  a  penalty  named  in  a  by-law  is  made  pay- 
able to  the  officers  of  the  corporation  for  the  time  bein^, 
for  the  use  of  the  company,  a  suit  for  such  a  penalty  can- 
not be  maintained  by  the  officers  who  held  office  at  the  time 
the  penalty  was  incurred,  when  such  officers  have  gone  out 
of  office  before  the  action  is  brought.^  In  an  action  of 
debt  to  recover  a  penalty,  a  declaration  stating  the  penalty 
as  being  forfeited  under  and  by  virtue  of  a  certain  by-law 
of  the  company  before  that  time  duly  made,  without  setting 
forth  the  charter  empowering  the  company  to  make  by- 
laws, the  by-law  made,  and  the  breach  of  it,  is  demurrable.® 
Such  a  declaration  must  set  out  the  by-law  and  count  spe- 
cially on  it.'^  The  reasonableness  of  by-laws  imposing  pen- 
alties has  been  already  discussed.^  • 

Double  punishment. 

§  149.  A  member  cannot  be  twice  punished  for  the 
same  offense;  hence  the  refusal  to  pay  a  fine  inflicted  for 
a  violation  of  a  by-law  does  not  authorize  the  infliction  of 
an  additional  fine.^  And  where  a  by-law  provides  a  pun- 
ishment of  fine  or  expulsion  for  its  violation,  a  member  who 

1  Bos.  &  P.  98.  In  one  New  York  case  it  is  intimated  that  payment 
of  fines  is  only  voluntary.  Thomas  v.  Musical  Mut,  Protective  Union 
(1890)   121  N.  Y.  45,  24  N.  E.  24. 

5  Graves  v.  Colby   (1838)   9  Adol.  &  E.  356. 

ePeltmakers  v.  Davis  (1797)  1  Bos.  &  P.  98. 

T  Ottawa  Union  Bldg.  Soc.  v.  Scott  (1865)  24  Up.  Can.  Q.  B.  341, 

8  See  ante,  c.  3,  §§  80-86. 

»  Pentz  V.  Citizens'  Fire  Ins.  Co.  (1871)  35  Md.  73. 

(173) 


§   150  BY-LAWS.  [Ch.    6 

has  violated  the  by-law  and  been  fined  therefor  and  paid 
his  fine  cannot  be  expelled  for  the  same  offense.^"  But  it 
has  been  held  in  Georgia  that  a  by-law  of  a  benevolent  so- 
ciety which  provided  that  members  should  be  dropped  un- 
less they  paid  the  fines  imposed  by  the  by-laws  for  delin- 
quencies was  valid.^^ 

Self-executing  by-laws. 

§  150.  By-laws  may  be  self-executing,  or  may  require 
affirmative  action  on  the  part  of  the  corporation  or  its  of- 
ficers to  inflict  a  penalty  or  effect  a  forfeiture  provided  for 
by  by-law.  It  may  be  said  generally  that,  if  the  language 
of  the  by-law  is  peremptory,  and  provides  for  no  further 
act  or  ceremony,  it  is  self -executing  ;^2  otherwise  not.^^  A 
by-law  forbidding  the  transfer  of  stock  by  any  stockholder 
who  is  indebted  to  the  corporation,  while  it  creates  a  lien 

10  People  V.  New  York  Benev.  Soc.  (1875)  3  Hun  (N.  Y.)  364. 

11  Hussey  v.  Gallagher  (1878)  61  Ga.  92.  See  contra,  Adley  v.  Reeres 
(1813)  2  Maule  &  S.  53. 

12  Card  V.  Carr  (1856)  1  C.  B.  (N.  S.)  197;  Rood  v.  Railway  P.  &  P. 
C.  Mut.  Ben.  Ass'n  (1887)  31  Fed.  64;  Schmidt  y.  Supreme  Tent,  K. 
of  M.  (1897)  97  Wis.  532,  73  N.  W.  22;  Freckmaan  v.  Supr«DQe  Coun- 
cil, R.  A.  (1897)  96  Wis.  133,  70  N.  W.  1113;  Lehman  v.  Clark  (1898) 
174  111.  279,  51  N.  E.  222;  Parker  v.  Bankers'  Life  Ass'n  (1900)  86  111. 
App.  315;  Railway  P,  &  F.  C.  Mut.  Aid  &  Ben.  Ase'n  v.  Leonard  (1899) 
82  111.  App.  214;  McDonald  v.  Ross-Lewin  (1883)  29  Hun  (N.  Y.)  87; 
Paster  v.  Nagelsmith  (1900)  30  Misc.  Rep.  791,  63  N.  Y.  Supp.  154; 
Rhule  V.  Diamond  Colliery  Accidental  Fund  (1900)  13  Pa.  Super.  Ct. 
41 G;  Borgraefe  v.  Supreme  Lodge.  K.  &  L.  of  H.  (1886)  22  Mo.  App.  127. 

13  Northwestern  Traveling  Men's  Ass'n  v.  Schauss  (1893)  148  111.  304, 
35  N.  E.  747;  Independent  Order  of  Foresters  v.  Haggerty  (1899)  86 
111.  App.  31;  Lime  City  B.,  L.  &  S.  Ass'n  v.  Black  (1893)  136  Ind.  544, 
(174) 


Ch.  6]  ENFORCEMENT  OF  BY-LAWS.  ^  151 

on  the  stock,  does  not  give  the  corporation  any  power  to 
sell  the  stock.* 3* 

Interference  by  courts. 

§  151.  Where  property  interests  are  involved,  the 
courts  will  interfere  to  prevent  injustice  in  enforcing  by- 
laws;** but  so  long  as  the  association  acts  within  the  pow- 
ers vested  in  it,  and  in  good  faith  pursues  the  methods 
prescribed  by  its  by-laws,  provided  such  by-laws  are  not  in 
violation  of  statute,  or  of  any  inalienable  right  of  the  mem- 
ber, the  determination  of  a  corporation,  like  that  of  a  judi- 
cial tribunal,  is  conclusive.*^     And  in  the  case  of  merely 

35  N,  E.  829;  Gray  v.  Christian  Soc.  (1884)  137  Mass.  329;  American 
Council,  No.  107,  v.  National  Council,  O.  U.  A.  M.  (1899)  63  N.  J.  Law, 
52,  43  Atl.  2;  La  Marsti  v.  L'Union  St.  J.  B.  Soc.  (1895)  68  N.  H.  229, 
38  Atl.  1045;  Wheeler  r.  Lackawanna  Coal  Co.  (1898)  5  Lack.  Leg.  N. 
97;  Murphy  v.  Independent  Order  S.  &  D.  of  J.  (1900)  77  Miss.  830,  27 
So.  624;  Modern  Woodmen  of  America  v.  Jameson  (1892)  48  Kan.  718, 
30  Pac.  460. 

13a  Tete  V.  Farmers'  &  Mechanics'  Bank  (1869)  4  Brewst.  (Pa.)  308. 

1*  Grand  Lodge,  K.  of  P.,  v.  People  (1895)  60  111.  App.  550;  Modem 
Woodmen  of  America  v.  Deters  (1896)  65  111.  App.  368;  Kolff  v.  St.  Paul 
Fuel  Exchange  (1892)  48  Minn.  215,  50  N.  W.  1036. 

15  Otto  V.  Journeymen  Tailors'  P.  &  B.  Union  (1888)  75  Cal.  308; 
Bachmann  v.  New  Yorker  D.  A.  B.  (1882)  64  How.  Pr.  (N.  Y.)  442,  12 
Abb.  New  Cas.  54;  Neukirch  v.  Keppler  (1900)  67  N.  Y.  Supp.  710;  Aus- 
tin V.  Butcher  (1900)  67  N.  Y.  Supp.  819;  Travers  v.  Abbey  (1900) 
104  Tenn.  665,  58  S.  W.  247;  Ash  v.  Methodist  Church  (1900)  27  Ont. 
App.  602;  Society  for  Visitation  of  Sick  v.  Commonwealth  (1866)  52 
Pa.  St.  125,  91  Am.  Dec.  139;  Grand  Castle  v.  Brldgeton  Castle  (N. 
J,;  1898)  40  Atl.  849;  HoefEner  v.  Grand  Lodge,  G,  O.  H.  (1890)  41  Mo. 
App.  359;  Croak  v.  High  Court,  I.  0.  F.  (1896)  162  111.  298,  44  N.  E.  521; 
Spilman  v.  Supreme  Council,  H.  C.  (1892)  157  Mass.  128,  31  N.  E.  776. 

(175) 


§  152  BY-LAWS.  [Ch.    6 

voluntary  unincorporated  associations,  the  general  rule  is 
that  the  courts  will  not  interfere.^® 

Same — Corporate  tribunajls. 

§  152.  The  by-laws  may  lawfully  provide  a  tribunal 
before  which  disputed  claims  and  rights  of  membership 
must  be  tried.  ^^  And  the  determination  of  such  tribunal 
upon  disputed  claims,^®  or  upon  expulsion  of  members/® 
may  be  made  final  and  conclusive.  But  it  has  been  held 
that  by-laws  providing  for  the  final  and  conclusive  deter- 
mination of  disputes  between  the  association  and  its  mem- 
bers cannot  preclude  recourse  to  the  courts.^*^     A  member 

16  Richardson  v.  Fremantle  (1871)  24  Law  T.  (N.  S.)  81;  Lambert  y. 
Addison  (1882)  46  Law  T.  (N.  S.)  20;  Lyttleton  v.  Blackburn  (1876)  33 
Law  T.  (N.  S.)  641;  Gardner  v.  Freemantle  (1871)  19  Wkly.  Rep.  256; 
People  V.  Board  of  Trade  (1875)  80  111.  137;  Ryan  v.  Lamson  (111.;  1892) 
4  Nat.  Corp.  Rep.  127;  White  v.  Brownell  (1868)  4  Abb.  Pr.  (N.  S.;  N. 
Y.)  162,  2  Daly,  329;  Bauer's  Appeal  (1878)  5  Wkly.  Notes  Cas.  (Pa.) 
485;  Rorke  v.  San  Francisco  S.  &  B.  B.  (1893)  99  Cal.  196,  33  Pac.  88L 

17  Hussey  v.  Gallagher  (1878)  61  Ga.  92;  Haebler  v.  New  York  Pro- 
duce Exchange  (1896)  149  N.  Y.  414,  44  N.  E.  87;  Roxbury  Lodge,  No. 
184,  V.  Hocking  (1897)  60  N.  J.  Law,  439;  Grand  Cent.  Lodge,  No.  297,' 
V.  Grogan  (1892)  44  111.  App.  Ill;  Cheney  v.  Ketcham  (1898)  7  Ohio 
Dec.  183,  5  Ohio  N.  P.  139;  Van  Poucke  v.  Netherland  St.  V.  P.  Soc. 
(1886)   63  Mich.  378,  29  N.  W.  863. 

18  Russell  V.  North  American  Ben.  Ass'n  (1898)  116  Mich.  699,  75  N. 
W.  137;  Raymond  v.  Farmers'  Mut.  Fire  Ins.  Co.  (1897)  114  Mich.  386, 
72  N.  W.  254;  Fillmore  v.  Great  Camp,  K.  of  M.  (1895)  103  Mich.  437,  61 
N.  W.  785;  Hembeau  v.  Great  Camp,  K.  of  M.  (1894)  101  Mich.  161,  59 
N.  W.  417;  Canfield  v.  Great  Camp,  K.  of  M.  (1891)  87  Mich.  626,  49  N. 
W.  875.     And  see  Osceola  Tribe,  No.  Ill,  v.  Schmidt  (1881)  57  Md.  W. 

i»  Anacosta  Tribe,  No.  12,  v.  Murbach  (1859)  13  Md.  93. 

aoMcMahon  v.   Supreme  Tent,  K.  of  M.   (1899)   15  Mo.   622,  52  S. 

(176) 


Ch.  6]  ENFORCEMENT  OF  BY-LAWS.  §  152 

must  in  all  cases  have  notice  of  proceedings  for  his  expul- 
sion, and  an  opportunity  to  be  heard,^^  and  all  formalities 
prescribed  by  the  by-laws  must  be  observed.^^  Such  by- 
laws are  always  strictly  construed,  and  their  language  will 
not  be  extended  by  implication.^^  But  a  member  may,  of 
course,  waive  notice  or  any  other  provision  for  his  bene- 
fit.^* And  it  has  been  held  that  a  by-law  providing  for  ex- 
pulsion without  notice  will  not  invalidate  proceedings  tak- 
en under  its  authority,  where  the  accused  by  his  own  act 
made  it  impossible  that  he  should  attend  had  notice  been 

W.  384;  Voluntary  Relief  Dept.  v.  Spencer  (1897)  17  Ind.  App.  123,  46 
N.  E.  477;  Daniher  v.  Grand  Lodge,  A.  O.  U.  W.  (1894)  10  Utah,  110, 
37  Pac.  245;  Quinlan  v.  St.  Francis  Xavier  Mut.  Ben.  See.  (1886)  2 
City  Ct.  Rep.  (N.  Y.)  356. 

aiLoubat  v.  LeRoy  (1886)  40  Hun  (N.  Y.)  546;  Wachtel  v.  Noak 
W.  &  O.  Benev.  Soc.  (1881)  84  N.  Y.  28;  Simmons  v.  Syracuse  B.  &  N. 
y.  &  O.  Benev.  Soc.  (1890)  56  Hun,  645,  10  N.  Y.  Supp.  293;  People  v^ 
Greenwood  Lake  Ass'n  (1892)  18  N.  Y.  Supp.  491;  Erd  v.  Bavarian  N. 
A.  &  R.  Ass'n  (1887)  67  Mich.  233,  34  N.  W.  555;  Lysaght  v.  St.  Louis. 
O.  S.  Ass'n  (1893)  55  Mo.  App.  538;  Swaine  v.  Miller  (1897)  72  Mo. 
App.  446;  Cotton  Jammers  &  Longshoremen's  Ass'n,  No.  2,  v.  Taylor 
(1900)  23  Tex.  Civ.  App.  367,  56  S.  W.  553;  Diligent  Fire  Co.  v.  Com- 
monwealth (1874)  75  Pa.  St.  291. 

22  Byram  v.  Sovereign  Camp,  W.  of  W.  (1899)  108  Iowa,  430,  79  N.  W.. 
144. 

23Schiff  V.  Supreme  Lodge,  O.  M.  P.  (1896)  64  111.  App.  341;  Grand. 
Cent.  Lodge,  No.  297,  v.  Grogan  (1892)  44  111.  App.  Ill;  Roxbury  Lodge,. 
No.  184,  V.  Hocking  (1897)  60  N.  J.  Law,  439,  38  Atl.  693;  Voluntary 
Relief  Dept.  v.  Spencer  (1897)  17  Ind.  App.  123,  46  N.  E.  477;  People  v. 
Alpha  Lodge,  No.  1  (1895)  13  Misc.  Rep.  677,  35  N.  Y.  Supp.  214.  But 
see  People  v.  St.  George's  Soc.  (1873)  28  Mich.  261. 

24  Miller  v.  United  States  Grand  Lodge  (1897)  72  Mo.  App.  499;  State 
T,  Cincinnati  C.  of  C.  &  M.  E.  (1897)  4  Ohio  N.  P.  244. 

(177) 

Bolsot  By  Laws — 12. 


§  152  BY-LAWS.  [Ch.   6 

given  him.^*^     By-laws  may  provide  for  a  preliminary  in- 
vestigation without  notice.^" 

The  authorities  are  agreed  that  before  a  member  can  ap- 
peal to  the  courts  he  must  exhaust  his  remedies  under  the 
by-laws  of  the  association.^'^  A  member  cannot  anticipate 
injury,  and  invoke  the  aid  of  equity  to  restrain  the  asso- 
ciation from  proceeding  with  a  hearing.^*  And  it  has  been 
lield  that  failure  to  appear  and  answer  charges  is  not  ex- 
•  nssed  by  insanity;^*  nor  will  the  miscarriage  of  an  assess- 
ment notice  under  a  by-law  authorizing  notice  by  mail  ex- 
cuse nonpayment,  so  as  to  invalidate  a  subsequent  suspen- 

26  Berkhout  v.  Supreme  Council,  R.  A.  (1899)  62  N.  J.  Law,  103,  43 
Atl.  1. 

26  Green  v.  Board  of  Trade  (1898)  174  111.  585,  51  N.  E.  599. 

27Lawson  v.  Hewell  (1897)  118  Cal.  613,  50  Pac.  763;  People  v. 
Women's  C.  O.  F.  (1896)  162  111.  78,  44  N.  B.  401;  Grant  v.  LangstafE 
(1893)  52  111.  App.  128;  Blumenfeldt  v.  Karschuck  (1891)  43  111.  App. 
434;  Levy  v.  Order  of  Iron  Hall  (1892)  67  N.  H.  593,  38  Atl.  18;  Jeane 
V.  Grand  Lodge,  A.  O.  U.  W.  (1894)  86  Me.  434,  30  Atl.  70;  McMahon 
V.  Supreme  Council,  O.  C.  F.  (1893)  54  Mo.  App.  468;  Levy  v.  Grand 
Lodge  (1894)  9  Misc.  Rep.  633,  30  N.  Y.  Supp.  885;  Wood  v.  What 
Cheer  Lodge  (1896)  35  Atl.  1045,  20  R.  I.  795,  38  Atl.  895;  Miller  v. 
Wolf  (1901)  18  Lane.  Law  Rev.  (Pa.)  105;  Coffee  v.  Southwark  Benefi- 
cial Soc.  (1876)  2  Wkly.  Notes  Cas.  (Pa.)  600;  Herman  v.  Plummer 
(1898)  20  Wash.  363,  55  Pac.  315;  Loeffler  v.  Modern  Woodmen  (1898) 
100  \Ms.  79,  75  N.  W.  1012;  State  v.  Castle  Excelsior  No.  1  (1883)  10 
Wkly.  Law  Bui.  (Ohio)  2;  Fillmore  v.  Great  Camp,  K.  of  M.  (1896)  109 
Mich.  13,  66  N.  W.  675;  Montour  v.  Grand  Lodge,  A.  O.  U.  W.  (Or.; 
1900)  62  Pac.  524. 

2«  Grand  Commandery  of  Massachusetts  v.  Stewart  (Mass.;  1900)  58 
N  E.  689;  Thomas  v.  Musical  Mut.  Protective  Union  (1890)  121  N.  Y. 
45.  1'4  N.  E.  26. 

■■'■>  Pieiffer  v.  Weishaupt  (1885)  13  Daly  (N.  Y.)  161. 
(178) 


Ch.  6]  ENFORCEMENT  OF  BY-LAWS.  S  153 

sion.'°  But  the  remedy  provided  by  the  by-laws  must  be 
adequate,^^  and  available  to  the  accused  of  his  own  motion, 
as  a  matter  of  right,  not  of  favor.^^  To  require  a  member 
to  appeal  from  one  tribunal  to  another  before  resorting  to 
the  courts,  a  by-law  must  be  mandatory,  and  not  merely 
permissive.^^  Proceedings  for  expulsion  must  be  in  ac- 
cordance with  the  by-laws  as  to  notice  and  jurisdiction  of 
the  offense  to  require  a  member  to  appeal  to  a  higher  tribu- 
nal for  reversal  of  his  expulsion.^* 

Same — ^When  expulsion  will  be  reviewed. 

§  153,  The  supreme  court  of  Illinois  lays  down  the  rule 
that,  in  determining  whether  the  courts  will  take  jurisdic- 
tion to  review  an  expulsion  from  membership,  a  distinc- 
tion must  be  observed  between  cases  in  which  the  associa- 
tion subjects  its  members  to  discipline  for  immoral  con- 
duct or  for  violation  of  the  rules  of  the  order,  and  those  in 
which  a  member  appeals  to  the  courts  to  secure  prop- 
erty rights  or  enforce  money  demands.  In  the  latter  case, 
it  is  sufficient  to  show  that  the  expulsion  was  invalid,  with- 
out showing  the  exhaustion  of  all  the  remedicvi  within  the 
rules  for  a  reversal  of  the  determination.     In  the  former 

80  Weakly  v.  Northwestern  Benev.  &  Mut.  Aid  Ass'n  (1886)   19  111. 
App.  327. 

31  People  V.  Musical  Mut,  Protective  Union  (1889)  118  N.  Y.  101,  23 
N.  H.  129. 

32  Holmany  v.  National  Slavonic  Soc,  (1899)  39  App.  Div.  573,  57  N. 
Y.  Supp.  720. 

33  Supreme  Lodge,  O.  S.  F.,  v.  Dey  (1897)  58  Kan.  283,  49  Pac.  74. 

84  Women's  C.  O.  F.  v.  Haley  (1900)  86  111.  App.  330,     But  see  Screw- 
men's  Ben.  Ass'n  v.  Benson  (1890)  76  Tex.  552,  13  S.  W.  879. 

(179) 


§   153  BY-LAWS.  [Ch.  6 

case,  it  must  appear  that  such  means  of  review  have  been 
exhausted.^''  A  member  of  a  voluntary  organization  may, 
of  course,  consent  to  have  his  private  conduct  reviewed  by 
the  association.^^  Hence  a  by-law  providinjij  for  the  ex- 
pulsion of  members  who  should  be  guilty  of  conduct  in- 
jurious to  the  interests  of  the  club  is  valid.^^  But  a  by-law 
which  vests  in  a  majority  power  to  expel  for  disorderly  con- 
duct has  been  held  to  be  void.^^  Where  a  board  of  trade 
suspends  a  member  on  a  charge  and  hearing  pursuant  to  by- 
laws providing  for  expulsion  when  a  member  shall  be  guilty 
of  any  act  of  bad  faith,  or  any  other  dishonorable  conduct, 
its  determination  will  not  be  reviewed  by  the  courts.^®  So, 
where  the  charter  of  an  incorporated  club  authorizes  the 
expulsion  of  members  for  causes  to  be  regulated  by  the  by- 
laws, a  by-law  which  gives  the  directors  power  to  expel  a 
member  "for  acts  or  conduct  which  they  may  deem  disor- 
derly" is  valid.*®  When  the  by-laws  of  a  club  subject  a 
member  to  expulsion  for  conduct  unbecoming  a  gentleman, 
on  a  two- thirds  vote  of  the  board  of  governors,  the  corpo- 
rate authorities  alone  must  determine  whether  the  con- 
duct of  a  member  in  accusing  the  daughter  of  a  fellow 
member,  within  the  club,  and  to  members  thereof,  of  writ- 
ing anonymous  letters,  is  a  violation  of  the  by-law.*^     But 

35  People  V.  Women's  C.  O.  F.  (1896)  162  111.  78,  44  N.  E.  401,    And 
see  Grand  Lodge,  K.  of  P.,  v.  People  (1895)  60  111.  App.  550. 

86  Farmer  v.  Board  of  Trade  (1899)  78  Mo.  App.  557. 

87  Dawkins  v.  Antrobus  (1879)  17  Ch.  Div.  615. 

88  Evans  v.  Philadelphia  Club  (1865)  50  Pa.  St.  107. 

89  Board  of  Trade  v.  Nelson  (1896)  162  111.  431,  44  N.  E.  743. 

40  Commonwealth  v.  Union  League  (1890)  135  Pa.  St.  301,  19  Atl.  1030^ 

41  United  States  v.  Metropolitan  Club  (1897)  11  App.  D.  C.  180. 
(180) 


Ch.   6]  ENFORCEMENT    OF    BY-LAWS.  §  153 

a  by-law  of  a  produce  exchaii.2:e  providing  that  a  member 
may  be  censured,  suspended  or  expelled  for  willful  viola- 
tion of  the  charter,  fraudulent  breach  of  contract,  or  any 
proceedings  inconsistent  with  just  and  equitable  princi- 
ples of  trade,  or  other  misconduct,  does  not  authorize  the 
board  of  managers  to  suspend  a  member  upon  a  charge 
involving  mere  breach  of  contract,^^  and  where  a  commit- 
tee of  a  board  of  trade,  charged  with  the  investigation 
of  an  alleged  failure  on  the  part  of  members  to  adjust 
their  respective  claims  to  money  deposited  as  margins 
upon  an  executory  contract  of  sale,  decides  such  contro- 
versy by  taking  the  difference  between  the  contract  price 
and  the  board  price,  without  permitting  the  accused  to 
show  that  the  board  price  was  not  the  real  market  value, 
but  merely  a  fictitious  price  produced  by  pretended  sales 
made  to  corner  the  market,  the  decision  of  such  commit- 
tee is  not  binding.'*^ 

Where  the  certificate  of  a  mutual  benefit  asisoclation  is 
made  payable  on  condition  that  the  insured  is  in  good 
standing  in  the  society  at  his  death,  and  the  constitution 
of  the  society  provides  that,  upon  due  trial  and  convic- 
tion of  unbecoming  conduct,  a  member  shall  be  repri- 
manded, suspended,  or  expelled,  loss  of  good  standing  can 
only  be  shown  by  proof  of  some  official  action  of  the  so- 
ciety, and  not  by  mere  oral  evidence.**     A  by-law  provid- 

*2  People  V.  New  York  Produce  Exchange  (1894)  8  Misc.  Rep.  662,  29 
N.  Y.  Supp.  307. 

*3Ryan  V.  Cudahy  (1895)  157  111.  1(W,  41  N.  E.  760. 

**  High  Court.  I.  O.  F..  v.  Zak  (1891)  136  lU.  186,  26  N.  E.  693. 

(181) 


§   153  BY-LAWS.  '  [Ch.  6 

ing  that  a  member  against  whom  charges  are  preferred 
shall  have  a  fair  trial  upon  evidence  has  been  held  to  mean 
legal  evidence  by  the  rules  of  the  common  law.^' 

48  Modern  Woodmen  v.  Deters  (1896)  66  111.  App.  368. 
(182) 


CHAPTER   Vn. 

NECESSITY  OF  BY-LAWS. 

§  154.  By-laws  a  practical  necessity. 

155.  Validity  of  acts  in  the  absence  of  by-lawa. 

156.  Same. 

157.  By-laws  should  be  adopted. 

By-laws  a  practical  necessity. 

§  154.  Although  it  is  theoretically  possible  for  a  cor- 
poration to  exist  without  by-laws,  yet  the  condition  of 
that  corporation's  affairs  will  be  much  like  that  of  a 
country  whose  statute  book  is  a  blank.  In  most,  if  not  all, 
of  the  United  States,  certain  matters,  such  as  the  calling 
of  corporate  meetings,  the  duties  of  corporate  officers,  and 
the  like,  are  left  by  statute  to  be  regulated  by  the  by-laws. 
Where  this  is  the  case,  the  neglect  to  adopt  by-laws  is  al- 
ways fraught  with  inconvenience,  and  sometimes  with  dis- 
aster. Courts  of  equity  can  interpret,  but  not  make  con- 
tracts;^ they  have  no  jurisdiction  to  supplement  the  powers 
of  voluntary  associations  when,  through  neglect  to  enact 
suitable  by-laws,  they  are  found  to  be  inadequate.^  But 
where  an  association  had  no  constitution  or  by-laws,  it  was 
held  that  a  usage  or  custom  in  relation  to  meetings  was 

1  Scanlan  v.  Snow  (1894)  2  App.  D.  C.  137. 

2  Powers  V.  Budy  (1895)  45  Neb.  208,  63  N.  W.  476. 

(183) 


§  155  BY-LAWS.  [Ch.    7 

entitled  to  consideration  in  determining  questions  relating 
thereto.* 

Validity  of  acts  in  the  absence  of  by-laws. 

§  155.  Where  a  corporation  has  no  by-laws  prescrib- 
ing the  manner  of  calling  corporate  meetings,  votes 
passed  at  meetings  of  the  corporation  are  not  binding,  un- 
less it  is  shown  that  all  the  members  either  were  present 
or  had  actual  notice  of  the  meeting.*  And  under  a  statute 
providing  that  stock  may  be  sold  to  satisfy  delinquent  as- 
sessments under  such  regulations  as  the  corporation  by  its 
by-laws  may  direct,  no  valid  sale  of  stock  for  delinquent 
assessments  can  be  made  where  no  by-laws  on  the  subject 
have  been  passed.**  Where  the  constitution  of  a  society 
provides  that  the  manner  of  suspending  members  for  non- 
payment of  dues  shall  be  detailed  in  the  by-laws,  the  so- 
ciety cannot  suspend  a  member  for  nonpayment  of  dues 
until  it  has  adopted  a  by-law  covering  the  case.®  When 
a  charter  directs  that  all  elections  of  directors  after  the 
first  shall  be  held  annually  at  such  times  as  the  by-laws 
shall  direct,  no  second  election  of  directors  can  be  held  un- 
til by-laws  designating  the  time  of  such  election  have  been 
adopted.^  It  has  been  held,  however,  under  a  statute  pro- 
viding  that  the  corporation   should   be  governed   by  di- 

«Ostrom  V.  Greene  (1897)  20  Misc.  Rep.  177,  45  N.  Y.  Supp.  852. 
4  Wiggin  V.  Freewill  Baptist  Church  (1844)  8  Mete.  (Mass.)  312. 
B  Mitchell  V.  "Vermont  Copper  Mining  Co.   (1876)   40  N.  Y.  Super.  Ct. 
413. 

•  District  Grand  Lodge  v.  Cohn  (1886)  20  111.  App.  343. 
T  Johnston  v.  Jones  (1872)  23  N.  J.  Eq.  216. 

(181) 


Ch.   7]  NECESSITY  OF  BY-LAWS.  ^  157 

rectors,  who  should  be  chosen  by  the  members  at  their  an- 
nual meeting,  and  that  such  annual  meeting  should  be  held 
at  such  time  and  place  as  might  be  provided  by  the  by- 
laws, that  an  election  of  directors  held  before  any  by-laws 
had  been  adopted  was  valid,  since  the  provision  that  the 
directors  should  be  elected  at  the  annual  meeting  was 
merely  directory,  and  did  not  invalidate  an  election  of  di- 
rectors held  at  some  other  time.* 
Same. 

§  156.  In  a  recent  case  in  Arkansas,  it  was  held  that 
where  there  was  no  by-law  providing  what  notice  of  di- 
rectors' meetings  should  be  given,  actual  personal  notice 
must  be  given  to  each  director  in  order  to  render  a  meeting 
of  the  board  of  directors  valid.^  And  in  a  Michisran  case, 
involving  a  corporation  whose  charter  provided  that  the 
corporation  should  consist  of  the  original  members  and 
such  other  persons  as  should  subscribe  or  become  holders 
in  the  manner  to  be  provided  by  the  by-laws,  it  was  held 
that  no  new  members  could  be  received  into  the  corporation 
until  a  set  of  by-laws  had  been  adopted.^** 

Sy-laws  should  be  adopted. 

§  157.  In  view  of  the  many  and  manifest  disadvantages 
and  inconveniences  attending  any  attempt  to  carry  on  the 
business  of  a  corporation  without  by-laws,  it  should  be  the 
first  duty  of  the  directors  of  a  newly-organized  corporation 
to  secure  the  adoption  of  a  full  code  of  by-laws. 

8  Hughes  V.  Parker  (1849)  20  N.  H.  70. 

»  Bank  of  Little  Rock  v.  McCarthy  (1892)  55  Ark.  473,  18  S.  W.  759, 
10  Carlisle  v.  Saginaw  V.  &  St.  L,  R.  Co.  (1873)  27  Mich.  315,  5  Am. 
Corp-  Cas.  456. 

(185) 


CHAPTER  Vin. 

PROOF  OF  BY-LAWS. 

§  158.    Necessity  of  proof. 
159.     Manner  of  proof. 

Necessity  of  proof. 

§  158.  Since  by-laws  partake  rather  of  the  nature  of 
contracts  than  of  statutes,  and  are  merely  of  local  and 
limited  application,  it  follows  that  when  any  question  in 
regard  to  them  arises  in  an  action  at  law,  the  by-laws  must 
be  pleaded^  and  proved.-  The  courts  cannot  take  judicial 
notice  of  them,  as  they  do  of  public  statutes.* 

Manner  of  proof. 

§  159.  The  contents  of  written  by-laws  cannot  be  prov- 
ed by  the  oral  testimony  of  one  of  the  officers  of  the  corpora- 
tion. The  by-laws  themselves  must  be  produced  in  court.* 
It  is  not  necessary  to  introduce  the  original  books  of  the  as- 

1  Wright  V.  Supreme  Commandery,  G.  R.  (1891)  87  Ga.  426,  13  S.  B. 
564;  Women's  C.  O.  F,  v.  Condon  (1899)  84  111.  App.  564;  Ottawa  Union 
Bldg.  Soc.  V.  Scott  (1865)  24  Up.  Can.  Q.  B.  341. 

2  O'Connell  v.  Supreme  Conclave,  K.  of  D.  (1897)  102  Ga.  143,  28  S.  E. 
282. 

3  Haven  v.  New  Hampshire  Asylum  (1843)  13  N.  H.  532,  38  Am.  Dec. 
512;  Carroll  v.  MuUanphy  Savings  Bank  (1880)  8  Mo.  App.  253. 

*Lumbard  v.  Aldrich  (1835)  8  N.  H.  31;  American  B.  &  L.  Ass'n  v. 
Mordock  (1894)  39  Neb.  413,  58  N.  W.  107. 

(186) 


Ch.    8]  PROOF  OF  BY-LAWS.  §  I59 

sociation  in  evidence;  by-laws  may  be  shown  by  a  proved 
copj.^  In  an  action  against  a  benefit  society  it  was  held 
that  the  plaintiff  need  not  prove  the  provisions  of  the  de- 
fendant's by-laws,  where  the  answer  set  them  forth.®  Proof 
of  by-laws  is  now  regulated  by  statute  in  some  states.^  The 
adoption  of  by-laws  may  be  proved  by  the  records  of  the 
meeting  at  which  they  were  adopted,^  and  where  there  is 
no  formal  record  of  their  adoption,  the  adoption  of  the  by- 
laws may  be  proved  by  oral  evidence  of  the  acts  and  repre- 
sentations of  the  officers  and  directors  of  the  corporation,* 
or  by  the  testimony  of  officers  or  members  who  were  pres- 
ent when  they  were  adopted.^"  In  an  action  by  the  receiver 
of  a  building  and  loan  association  against  one  of  its  mem- 
bers for  dues,  it  was  held  that  the  defendant's  jwiss-book, 
which  contained  a  copy  of  the  by-laws,  was  admissible  in 
evidence  in  proof  of  the  by-laws  on  behalf  of  the  plaintiff, 
in  connection  with  the  testimony  of  a  witness  that  the  by- 
laws contained  in  that  book  were  the  only  by-laws  the  asso- 
ciation had  ever  had.^^  The  by-laws  of  a  corporation  re- 
stricting and  limiting  the  powers  of  the  officers  are  com- 
petent evidence  as  to  the  authority  of  such  officers,^^  q^ 

6  Zimmerman  v.  Masonic  Aid  Ass'n  (1896)  75  Fed.  236. 

6  Greenspan  v.  American  Star  Order  (1892)  20  N.  Y.  Supp.  945. 

7  See  High  Court,  I.  O.  F.,  v.  Heath  (1898)  80  111.  App.  239;  Lloyd  y. 
Supreme  Lodge.  K.  of  P.  (C.  C.  A.;  1899)  98  Fed.  66. 

8  Commonwealth  v.  Woelper  (1817)  3  Serg.  &  R.  (Pa.)  31. 
0  Union  Bank  v.  Ridgely  (1827)  1  Har.  &  G.  (Md.)  412. 

10  Masonic  Mut.  Ben.  Ass'n  v.  Severson  (1^99)  71  Conn.  719,  43  AtL 
192. 

"  Frank  v.  Morrison  (1882)  58  Md.  438. 

12  De  Best  V.  Albert  Palmer  Co.  (1885)  1  How.  Pr.  (N.  S.:  N.  Y.)  501; 
Railway  E.  &  P.  Co.  v.  Lincoln  Nat.  Bank  (1894)  82  Hun,  8,  31  N.  Y. 
Supp.  44. 

(187) 


§  159  BY-LAWS.  [Ch.  8 

the  by-laws  are  also  evidence  of  the  extent  of  the  ofl&cers' 
liability  to  the  corporation.^ ^  The  fact  that  the  articles  re- 
quire a  written  record  does  not  necessarily  exclude  oral  evi- 
dence of  the  facts  required  to  be  kept  in  writing.^^  In  a  suit 
against  a  mutual  benefit  society  for  benefits,  the  by-laws  of 
the  society  may  be  introduced  in  evidence  by  it,  although 
they  are  not  attached  to  the  certificate  jf  membership.^" 

13  Bank  of  Wilmington  v.  Wollaston  (1840)  3  Har.  (Del.)  90. 

14  Du  Quoin  Star  C.  M.  Co.  v.  Thorwell  (1879)  3  111.  App.  394. 
18  Espy  V.  American  Legion  of  Honor  (1893)  7  Kulp  (Pa.)  134. 

(188), 


APPENDIX. 


APPENDIX. 


FORM    OF    BY-LAWS. 

As  the  by-laws  of  private  corporations  are  often  drawn 
up  by  persons  not  learned  in  the  law,  it  has  been  thought 
jadvisable  to  append  to  this  work  a  set  of  by-laws.  This 
code  of  by-laws  is  not  intended  as  a  model  to  be  slavishly 
followed,  but  rather  as  a  suggestion  to  be  considered  in 
•connection  with  the  charter  of  the  corporation  and  the 
statutes. 

It  is  impossible  to  frame  a  set  of  by-laws  that  will  be 
proper  and  sufficient  for  all  kinds  of  corporations  organ- 
ized under  the  laws  of  different  states.  The  first  task  of  a 
person  about  to  draw  up  a  set  of  by-laws  should  be  to  ex- 
amine carefully  the  charter  of  the  corporation  and  the 
statutes  of  the  state  under  which  it  is  organized.  After 
he  has  done  that,  he  may  derive  some  assistance  from  the 
examination  of  the  following  by-laws : 

BY-LAWS. 


ARTICLE  I. 
STOCK. 

Section  1.    The  capital  stock  of  this  corporation  shall 


APPENDIX. 


191 


be  divided  into shares  of  the  value  of dol- 
lars each. 

Sec.  2.  All  certificates  of  stock  shall  be  signed  by  both 
the  president  and  the  secretary,  and  sealed  with  the  cor- 
porate seal. 

Sec.  3.  Shares  of  capital  stock  may  be  transferred  by 
indorsement  of  the  certificate,  and  its  surrender  to  the 
secretary  for  cancellation,  whereupon  a  new  certificate 
«hall  be  issued  to  the  transferee.  The  board  of  directors 
may  by  resolution  forbid  the  transfer  of  stock  for  a  space 
of  time,  not  exceeding  thirty  days,  immediately  before  a 
meeting  of  the  stockholders,  or  immediately  before  the  time 
when  a  dividend  is  payable. 

Sec.  4.  Upon  failure  of  any  stockholder  to  pay  any  as- 
sessment levied  on  his  stock  for  thirty  days  after  the 
same  shall  become  due,  the  secretary  shall  cause  a  written 
or  printed  notice  to  be  served  personally  on  such  stock- 
holder, or  to  be  sent  to  him  by  registered  mail.  Such 
notice  shall  state  the  amount  due  from  such  stockholder, 
and  shall  notify  him  that,  unless  he  pays  the  same  within 
thirty  days  after  the  service  or  mailing  of  said  notice,  his 
stock  will  be  forfeited.  If  the  delinquent  stockholder  fails 
to  pay  the  entire  amount  due  from  him  within  the  time 
specified  in  such  notice,  his  stock  shall  become  forfeited 
without  further  action  on  the  part  of  the  corporation,  and 
such  forfeited  stock  may  thereupon,  without  further  no- 
tice, be  sold  by  the  secretary  for  the  benefit  of  the  corpora- 
ction  at  either  public  or  private  sale ;  provided  that  the  pro- 


192  APPENDIX. 

ceeds  of  such  sale,  if  any,  over  and  above  the  amount  due 
on  said  stock,  shall  be  paid,  on  demand,  to  the  delinquent 
stockholder. 

ARTICLE  n. 

STOCKHOLDERS'  MEETINGS. 

Section  1.  The  regular  annual  meeting  of  the  stock- 
holders of  this  corporation  shall  be  held  at  the  general 

office  of  the  corporation  in  the  city  of    on  the 

first  Monday  of in  each  year,  at  the  hour  of  . . . 

o'clock  P.  M.  Special  meetings  of  the  stockholders  may  be 
called  by  the  directors.  Such  special  meetings  shall  be 
held  at  the  same  place  and  the  same  hour  as  the  regular 
annual  meeting. 

Sec.  2.  The  secretary  shall  mail  to  each  stockholder  at 
his  last  known  place  of  residence  a  written  or  printed  no- 
tice of  the  time  and  place  of  holding  every  annual  or  special 
stockholders'  meeting.  Such  notice  shall  be  mailed  at 
least  thirty  days  before  the  time  at  which  the  meeting  is 
to  be  held. 

Sec.  3.  At  all  meetings  of  the  stockholders,  each  stock- 
holder shall  be  entitled  to  cast  one  vote  for  each  share  of 
stock  held  by  him.  He  may  vote  in  person  or  by  proxy  ap- 
pointed in  writing. 

Sec.  4.  At  any  stockholders'  meeting,  a  majority  of  the 
stock  issued  must  be  represented  in  order  to  constitute  a 
quorum  for  the  transaction  of  business ;  but  the  stockhold- 


APPENDIX.  X93 

ers  present  at  any  meeting,  thoiio;h  less  than  a  quorum, 
may  adjourn  the  meeting  to  some  other  day. 

Sec.  5.  The  president  and  secretary  of  the  corporation 
shall  act  as  president  and  secretary  of  each  stockholders' 
meeting,  unless  the  meeting  shall  otherwise  decide, 

ARTICLE  in. 

DIRECTORS. 

Section  1.  The  affairs  of  this  corporation  shall  be  man- 
aged by  a  board  of directors,  who  shall  be  elected 

by  the  stockholders  at  the  regular  annual  meeting,  and 
who  shall  hold  office  for  one  year,  and  until  their  succes- 
sors are  elected. 

Sec.  2.  The  directors  shall  elect  all  the  other  officers  of 
the  corporation.  Vacancies  in  the  board  of  directors  may 
be  filled  by  election  by  the  remaining  members  of  the  board 
at  any  regular  or  special  meeting. 

Sec.  3.  No  person  shall  be  eligible  to  the  office  of  di- 
rector who  is  not  a  stockholder  in  the  corporation.  A 
transfer  by  a  director  of  all  his  stock  in  the  corporation 
shall  operate  as  a  resignation  of  his  office. 

Sec.  4.  No  director  shall  receive  any  salary  or  compen- 
sation for  his  services  as  director. 

Sec.  5.  Regular  meetings  of  the  board  of  directors  shall 
be  held  immediately  after  the  adjournment  of  each  regular 
annual  meeting  of  the  stockholders,  and  also  upon  the  first 

Boisot  By  Laws — 13. 


194 


APPENDIX. 


Monday  of  each  month  at  the  hour  of  . . .  o'clock  P.  M. 
Such  meetings  shall  be  held  at  the  general  office  of  the 
corporation. 

Sec.  6.  Special  meetings  of  the  board  of  directors  may 
be  called  at  any  time  by  the  president  by  mailing  to  each 
director  at  least  three  days  before  the  time  of  such  meet- 
ing a  written  or  printed  notice  stating  the  time  and  place 
of  holding  such  meeting. 

Sec,  7.  At  any  regular  or  special  meeting  of  the  board 
of  directors,  a  majority  of  the  directors  shall  constitute  a 
quorum  for  the  transaction  of  business,  but  a  smaller 
number  may  adjourn  the  meeting  to  another  day. 

Sec.  8.  At  each  regular  annual  meeting  of  the  stock- 
holders, the  directors  shall  present  a  general  statement 
of  the  business  of  the  preceding  year  and  a  report  of  the 
financial  condition  of  the  corporation. 

ARTICLE  IV. 

OFFICERS. 

Section  1.  The  officers  of  tliis  corporation  shall  con- 
sist of  a  president,  vice  president,  secretary,  and  treas- 
urer, who  shall  be  elected  by  the  directors,  and  who  shall 
perform  the  duties  usually  appertaining  to  their  respective 
offices.  They  shall  hold  office  for  one  year,  and  until  ths'P 
successors  are  elected  and  qualified. 

Sec.  2.  No  person  shall  be  eligible  to  the  office  of  presi- 
dent or  vice  president  who  is  not  a  director.     A  president 


APPENDIX.  195 

or  vice  president  who  ceases  to  be  a  director  ceases  at  the 
same  time  to  hold  the  oflQce  of  president  or  vice  president. 
The  offices  of  secretary  and  treasurer  may  be  held  by  the 
same  person  at  the  same  time. 

Sec.  3.  The  directors  may,  by  resolution,  require  any 
or  all  of  said  officers  to  give  bond  to  the  corporation  with 
sufficient  surety  conditioned  for  their  faithful  performance 
of  the  duties  of  their  respective  offices. 

Sec.  4.  All  written  contracts  entered  into  on  behalf  of 
the  corporation  shall  be  signed  by  both  the  president  and 
the  secretary,  and  sealed  with  the  corporate  seal. 

ARTICLE  V. 

AMENDMENT. 

Section  1.  These  by-laws  or  any  of  them  may  be  alter- 
ed, amended,  added  to,  or  repealed  by  the  same  body  that 
enacted  them. 


The  foregoing  by-laws  are  substantially  the  same  as  those 
published  in  the  first  edition  of  this  work.  The  main  idea 
in  drawing  them  was  to  put  in  the  essential  features,  and 
leave  out  everything  else,  on  the  theory  that  unnecessary 
by-laws  may  become  a  trap  for  unwary  officers.  The  au- 
thor has  been  gratified  to  learn  that  this  code  of  by-laws 
has  been  used  with  satisfaction  in  many  cases  since  its  first 
publication.  Some  persons,  however,  may  prefer  a  more 
elaborate  code,  and  therefore  it  has  been  thought  best  to 
add  to  this  edition  the  following  alternative  set  of  by-laws : 


196  APPENDIX. 

BY-LAWS. 

ARTICLE  L 
SEAL  AND  PLACE  OF  BUSINESS. 

Section  1.  The  corporate  seal  of  this  corporation  shall 
have  engraved  on  it  in  the  center  the  words  "Corporate 
Seal,"  and  the  date  of  incorporation,  and  in  a  circle  around 
the  edge  the  full  name  of  the  corporation. 

Sec.  2.     Until  changed  by  the  directors,  the  general 

office  of  this  corporation  shall  be  at  No , 

Street,  in  the  City  of ,  County  of ,  and  State 

of ,  but  the  directors  may  at  any  regular  or  special 

meeting  change  the  place  of  such  office. 

ARTICLE  II. 

CAPITAL    STOCK. 

Section  1.  The  capital  stock  of  this  corporation  shall 
be  divided  into shares,  of  the  value  of dol- 
lars each.  All  of  said  stock  shall  entitle  the  holders  to 
equal  rights  in  the  corporation  unless  the  stockholders,  by 
unanimous  vote,  shall  determine  to  divide  the  stock  into 
two  classes,  namely,  common  stock  and  preferred  stock. 

Sec.  2.  All  certificates  of  stock  shall  be  signed  by  the 
president,  and  sealed  with  the  corporate  seal,  attested  by 
the  secretary.  They  shall  state  whether  the  stock  is  fully 
paid  or  not.  In  case  preferred  stock  is  issued,  the  contract 
in  regard  to  such  stock  shall  be  fully  set  forth  in  the  certifi- 
cates of  preferred  stock,  and  the  certificates  of  common 
ntock  shall  state  the  respective  amounts  of  both  the  pre- 


APPENDIX.  197 

ferred  and  common  stock.  The  directors  may  also  pro- 
vide for  the  registration  of  all  stock  by  some  bank  or  trust 
company. 

Sec.  3.  Shares  of  capital  stock  may  be  transferred  on 
indorsement  of  the  certificate  duly  witnessed,  and  its  sur- 
render to  the  secretary  for  cancellation,  whereupon  the 
stock  shall  be  transferred  on  the  books  of  the  corporation, 
and  the  transferee  shall  be  entitled  to  have  a  new  certifi- 
cate issued  to  him.  The  board  of  directors  may  by  resolu- 
tion forbid  the  transfer  of  stock  on  the  books  of  the  cor- 
poration for  a  space  of  time,  not  exceeding  thirty  days,  im- 
mediately before  a  meeting  of  the  stockholders,  or  imme- 
diately before  the  payment  of  a  dividend. 

Sec.  4.  In  case  of  loss  or  destruction  of  a  certificate  of 
capital  stock,  the  owner  shall  not  be  entitled  to  receive  a 
new  certificate  in  lieu  thereof  until  the  lapse  of  sixty  days 
after  written  notice  of  such  loss  or  destruction  has  been 
served  on  the  secretary,  and  then  only  on  making  satisfac- 
tory proof  of  such  loss  or  destruction,  and  on  giving  the 
corporation  ample  indemnity,  by  bond  or  otherwise,  as  the 
directors  may  prescribe.  Any  such  new  certificate  shall  be 
plainly  marked  "Duplicate"  on  the  face  thereof. 

Sec.  5.  In  case  of  the  death  of  a  stockholder,  a  new 
certificate  may  be  issued  to  his  personal  representatives  on 
surrender  of  tlie  old  cei-tificate,  and  on  filing  with  the  secre- 
tary a  duly-certified  copy  of  the  letters  testamentary  or  of 
administration. 

Sec.  6.     Stock  subscriptions  shall  be  paid  at  such  times 


198  APPENDIX. 

and  in  such  installments  as  may  be  determined  by  the  di- 
rectors, but  all  subscribers  shall  haye  the  privilege  of  pay- 
ing for  their  stock  in  full  at  any  time,  even  though  full  pay- 
ment has  not  yet  been  called  for. 

Sec.  7.  Upon  failure  of  any  subscriber  or  stockholder 
to  pay  any  assessment  levied  by  the  directors  on  his  stock 
for  thirty  days  after  the  same  shall  become  due,  the  secre- 
tary shall  cause  a  written  or  printed  notice  to  be  served 
personally  on  such  delinquent  stockholder,  or  to  be  sent  to 
him  by  registered  mail  at  his  last  known  address.  Such 
n  tice  shall  state  the  amount  due  from  such  stockholder, 
and  shall  notify  him  that,  unless  he  pays  the  same  within 
thirty  days  after  the  service  or  mailing  of  such  notice,  his 
stock  will  be  forfeited.  If  the  delinquent  stockholder  fails 
to  pay  the  entire  amount  due  from  him  within  the  time 
specified  in  such  notice,  his  stock  shall  become  forfeited 
without  further  action  on  the  part  of  the  corporation,  and 
such  forfeited  stock  may  thereupon,  without  further  no- 
tice, be  sold  by  the  secretary  for  the  benefit  of  the  corpora- 
tion at  either  public  or  private  sale,  provided  that  the  sur- 
plus proceeds  of  such  sale,  if  any,  over  and  above  the 
amount  due  on  such  stock,  shall  be  paid,  on  demand,  to  the 
delinquent  stockholder. 

ARTICLE  in. 
STOCKHOLDERS'   MEETINGS. 

Section  1.  The  regular  annual  meeting  of  the  stock- 
holders of  this  corporation  shall  be  held  at  the  general 


.,/ 


APPENDIX.  199 

office  of  the  corporation  on  the day  of  the  month 

of in  each  year,  at  the  hour  of  . . .  o'clock  P.  M. ; 

provided  that,  when  said  day  shall  fall  on  Sunday,  such 
meeting  shall  be  held  on  the  following  day,  at  the  same 
hour  and  place. 

Sec.  2.  Special  meetings  of  the  stockholders  may  be 
called  by  the  directors,  and  it  shall  be  their  duty  to  do  so 
whenever  requested  in  writing  by  stockholders  holding  one- 
tenth  or  more  of  the  capital  stock.  Such  special  meetings 
shall  be  held  at  the  same  place  and  the  same  hour  as  the 
regular  annual  meetings. 

Sec.  3.  The  secretary  shall  mail  to  each  stockholder,  at 
his  last  known  address,  a  written  or  printed  notice  of  the 
time  and  place  of  holding  every  annual  or  special  stock- 
holders' meeting.  Such  notice  shall  be  mailed  at  least 
thirty  days  before  the  day  of  the  meeting.  The  secretary 
shall  also  publish  such  notice  at  least  once  in  a  newspaper 

of  general  circulation  published  in  the  city  of ,  such 

publication  to  be  made  at  least  ten  days  before  the  day  of 
the  meeting. 

Sec  4.  At  all  meetings  of  the  stockholders,  each  stock- 
holder shall  be  entitled  to  cast  one  vote  for  each  share  of 
stock  held  by  him,  unless  he  is  in  default  in  paying  for  the 
same.  Such  votes  may  be  cast  in  person  or  by  proxy.  All 
proxies  shall  be  in  writing  signed  by  the  stockholder,  and 
acknowledged  like  a  conveyance  of  land. 

Sec.  5.  At  any  stockholders'  meeting,  a  majority  of  the 
stock  issued  must  be  represented  in  order  to  constitute  a 


200  APPENDIX. 

quorum  for  the  transaction  of  business;  but  the  stock- 
holders present  at  any  meeting,  though  less  than  a  quorum, 
may  adjourn  the  meeting  to  some  other  day. 

Sec.  6.  The  president  and  secretary  of  the  corporation 
shall  act  as  president  and  secretary,  respectively,  of  each 
stockholders'  meeting,  and  they  shall  constitute  a  commit- 
tee to  pass  on  the  authenticity  of  proxies. 

Sec.  7.  The  order  of  business  at  stockholders'  meetings 
shall  be  as  follows:  (1)  Roll  call;  (2)  reading  of  min- 
utes of  previous  meeting;  (3)  report  of  president;  (4) 
report  of  treasurer;  (5)  election  of  directors;  and  (6) 
miscellaneous  business.  Election  of  directors  shall  be  by 
ballot. 

ARTICLE  IV. 

DIRECTORS. 

Section  1.  The  affairs  of  this  corporation  shall  be  man- 
aged by  a  board  of directors,  who  shall  be  elected 

by  the  stockholders  at  the  regular  annual  meeting,  and  who 
shall  hold  office  for  one  year,  and  until  their  successors  are 
elected. 

Sec.  2.  The  directors  shall  elect  all  the  other  officers 
of  the  corporation.  Such  election  shall  be  held  annually, 
as  soon  as  possible  after  the  annual  stockholders'  meeting. 
Vacancies  in  the  board  of  directors  may  be  filled  by  elec- 
tion by  the  remaining  members  of  the  board  at  any  regular 
or  special  meeting. 


APPENDIX.  201 

Sec.  3.  Only  stockholders  in  the  corporation  shall  be 
eligible  to  the  office  of  director.  A  transfer  by  a  director 
qI  all  his  stock  in  the  corporation  shall  operate  as  a  resig- 
nation of  his  office. 

Sec.  4.  Directors  shall  not  receive  any  salary  or  com- 
pensation for  their  services  as  directors,  but  a  director  who 
is  also  an  officer  of  the  corporation  may,  by  resolution  of 
the  board,  receive  compensation  for  his  services  as  such 
officer. 

Sec.  5.  Regular  meetings  of  the  board  of  directors  shall 
be  held  immediately  after  the  adjournment  of  each  regular 
annual  meeting  of  the  stockholders,  and  also  upon  the  first 
Monday  of  each  month  at  the  hour  of  . . .  o'clock  P.  M. 
All  directors'  meetings  shall  be  held  at  the  general  office 
of  the  corporation. 

Sec.  6.  Special  meetings  of  the  board  of  directors  may 
be  called  at  any  time  by  the  president,  or  by  any  two  direct- 
ors, by  mailing  to  each  director,  at  least  three  days  before 
the  time  of  such  meeting,  a  written  or  printed  notice  stat- 
ing the  time  of  such  meeting. 

Sec.  7.  At  any  regular  or  special  meeting  of  the  board 
of  directors,  a  majority  of  the  directors  shall  constitute  a 
quorum  for  the  transaction  of  business,  but  a  smaller  num- 
ber may  adjourn  the  meeting  to  another  day. 

Sec.  8.  At  all  meetings  of  the  board  of  directors,  the 
order  of  business  shall  be  as  follows:  (1)  Roll  call;  (2) 
reading  of  minutes  of  previous  meeting;  (3)   reports  from 


202  APPENDIX. 

oflBcers;  (4)  reports  from  committees;  (5)  unfinished 
business;  and  (6)  new  business.  Whenever  there  are  any 
oflQcers  or  directors  to  be  elected,  such  election  shall  take 
place  immediately  after  the  reading  of  the  minutes  of  the 
previous  meeting. 

ARTICLE  V. 

OFFICERS. 

Sectio:;  1.  The  officers  of  this  corporation  shall  be  a 
president,  vice  president,  secretary,  and  treasurer.  They 
shall  be  elected  by  the  directors  as  soon  as  practicable  after 
each  election  of  directors,  and  shall  hold  office  for  one  year, 
and  until  their  successors  are  elected  and  qualified. 

Sec.  2.  Only  directors  shall  be  eligible  to  the  offices  of 
president  and  vice  president.  A  president  or  vice  presi- 
dent who  ceases  to  be  a  director  shall  cease  to  hold  office 
at  president  or  vice  president  as  soon  as  his  successor  is 
elected.  The  offices  of  secretary  and  treasurer  may  be  held 
by  the  same  person  at  the  same  time. 

Sec.  3.  The  president  shall  be  the  general  executive  of!?, 
cer  of  the  corporation.  He  shall  preside  at  all  meetings 
of  the  directors  and  of  the  stockholders,  shall  prepare  and 
present  at  each  annual  stockholders'  meeting  a  report  of 
the  business  of  the  corporation  for  the  preceding  year,  and 
a  stal.ment  of  its  present  condition,  shall  sign  all  stock 
certificates  and  written  contracts  of  the  corporation,  and 
perform  generally  all  the  duties  usually  appertaining  to 
the  office  of  president  of  a  corporation.     He  shall  have 


APPENDIX.  20S 

general  charge  (subject  to  the  control  of  the  board  of  direct- 
ors) of  the  business  affairs  of  the  corporation,  may  sign 
and  indorse  bonds,  bills,  checks,  and  promissory  notes  on 
behalf  of  the  corjMjration,  and  may  borrow  money  in  its 
name;  but  he  shall  have  no  power,  without  the  previous 
consent  of  the  board  of  directors,  to  incur  any  debt  on  be- 
half of  the  corporation  in  excess  of  the  sum  of dol- 
lars, or,  without  such  consent,  to  bind  the  corporation  by 
any  obligation  involving  a  liability  in  excess  of  said  sum. 
He  shall  at  all  times  keep  the  directors  advised  as  to  the 
affairs  of  the  corporation. 

Sec.  4.  The  vice  president  shall  preside  at  any  meetings 
of  the  stockholders  and  of  the  directors  from  which  the 
president  may  be  absent,  and  he  may  perform  any  of  the 
other  duties  of  the  president  whenever  directed  to  do  so  by 
vote  of  the  board  of  directors. 

Sec.  5.  The  secretary  shall  keep  the  minutes  of  all 
stockholders'  and  directors'  meetings,  shall  keep  the  stock 
register  and  stock  transfer  book,  and  shall  be  the  cus- 
todian of  the  corporate  seal  and  of  all  records,  papers,, 
files,  and  books  of  the  corporation  except  the  account 
books.  He  shall  affix  the  corporate  seal  to  all  documents 
to  which  it  should  be  attached,  aud  attest  the  same  by  his 
signature,  and  shall  perform  generally  all  the  duties  usual- 
ly appertaining  to  the  office  of  secretary  of  a  corporation. 

Sec.  6.  The  treasurer  shall  have  custody  of  all  the 
money  and  funds  of  the  corporation,  shall  keep  its  books 
of  account,  and  shall  countersign  the  checks  of  the  corpora- 


204  APPENDIX. 

tion.  He  shall  deposit  the  funds  of  the  corporation  in 
some  bank  or  banks,  to  be  selected  by  him,  with  the  ap- 
proval of  the  board  of  directors,  in  the  name  of  the  cor- 
poration. He  shall  give  bond  to  the  corporation  in  an 
amount  to  be  fixed  by  the  board  of  directors,  and  with  sure- 
ties to  be  approved  by  them.  He  shall  at  all  times  keep 
the  directors  fully  informed  as  to  the  financial  condition 
of  the  corporation,  and  he  shall  prepare  and  present  at 
each  annual  stockholders'  meeting  a  report  showing  the  re- 
ceipts and  disbursements  of  the  preceding  year,  and  the 
present  financial  condition  of  the  corporation.  He  shall 
be  the  general  financial  ofiicer  of  the  corporation,  and  shall 
perform  all  the  duties  usually  appertaining  to  the  office  of 
treasurer  of  a  corporation. 

ARTICLE  VI. 

AMENDMENT. 

Section  1.     These  by-laws,  or  any  of  them,  may  be  al- 
tered, amended,  added  to,  or  repealed  by  the ^  at  any 

regular  or  special  meeting. 


Since  the  great  industrial  corporations  are  now  very 
much  before  the  public,  copies  of  the  by-laws  of  two  of  them 
are  here  given.  It  will  be  noted  that  one  of  these  com- 
panies has  adopted  a  very  brief  form  of  by-laws,  and  the 
other  a  very  long  one,* 

1  Insert  "stockholders"  or  "directors,"  according  to  the  provisions  of 
the  law  under  which  the  corporation  is  organized. 

2  These  by-laws  are  taken  from  the  Preliminary  Report  of  the  United 
States  Industrial  Commission  on  Trusts  and  Industrial  Combinations. 


APPENDIX.  205 

BY-LAWS. 

OF   THE 

STAT^DARD    OIL    COMPAJSTY. 


ARTICLE  I. 
MEETING  OF  STOCKHOLDERS. 

The  annual  meeting  of  stockholders  and  the  election  of 
directors  shall  be  held  at  the  office  of  the  company  in 
Bayonne,  New  Jersey,  on  the  second  Tuesday  in  January 
in  each  year,  and  said  meeting  may  be  adjourned  from  day 
to  day  until  its  business  is  completed. 

Special  meetings  of  the  stockholders  may  be  called  by  a 
majority  of  all  the  directors  at  such  times  and  places  da 
they  may  appoint. 

The  directors  shall  also  call  a  meeting  of  stockholders 
within  ten  days  after  a  written  request  so  to  do,  signed  by  a 
majority  of  the  stockholders. 

The  business  of  such  special  meetings  shall  be  confined 
to  the  subject  specified  in  the  notice  therefor. 

Notice  of  the  time  and  place  of  all  meetiiurs  of  stock- 
holders shall  be  signed  by  the  secretary,  and  be  given  to 
each  stockholder  in  person  or  be  mailed  to  his  proper  post- 
office  address  at  least  ten  days  previous  to  the  time  of  meet 
ing. 

At  all  meetings,  stockholders  who  may  be  registered  a^ 
such  on  the  books  of  the  company  may  vote  in  person,  by 
agent,  or  by  proxy,  and  shall  have  one  vote  for  each  and 
every  share  of  stock  standing  in  their  names,  but  no  share- 


206  APPENDIX. 

holder  shall  be  entitled  to  vote  upon  any  stock  which  has 
not  stood  in  his  name  ten  days  prior  to  the  day  appointed 
for  the  election. 

The  transfer  books  may  be  closed  for  ten  days  previous 
to  the  annual  election. 

At  all  elections  the  directors  shall  be  the  judges  of  the 
qualifications  of  voters,  shall  prescribe  rules  and  regula- 
tions for  voting,  appoint  inspectors  to  collect  and  count 
the  votes,  and  cause  the  result  of  the  election  to  be  entered 
in  full  on  their  minutes. 

The  board  may  commit  its  powers  in  this  matter  to  a 
committee  of  its  own  members. 

The  election  shall  be  held  on  the  day  designated  for  that 
purpose,  unless  prevented  by  accident,  in  which  case  the 
board  shall  designate  another  day  for  the  election. 

A  majority  of  the  stockholders  present  at  any  meeting 
shall  constitute  a  quorum. 

AKTICIE  II. 

BOARD  OF  DIRECTORS. 

The  board  of  directors  shall  consist  of  thirteen  persons 
who  shall  hold  their  office  one  year,  and  until  their  suc- 
cessors are  elected. 

The  board  of  directors,  at  their  first  meeting  after  every 
annual  election,  shall  elect  a  president,  four  vice  presi- 
dents, a  treasurer,  and  secretary,  and  ^uch  officers  shall 
hold  their  offices  during  the  pleasure  of  the  board.  One 
person  may  be  both  secretary  and  treasurer. 

In  case  of  any  vacancy  in  the  board  of  directors  by  death 


APPENDIX.  207 

resignation,  or  otherwise,  the  board  shall  have  the  pov.er 
to  fill,  for  the  unexpired  term,  such  vacancy  by  ballot. 

The  board  may  also  appoint  one  assistant  treasurer,  one 
assistant  secretary,  and  such  additional  oflBcers  and  agents 
as  they  may  deem  advisable,  and  remove  the  same  at  their 
pleasure. 

In  the  absence  of  the  president  and  vice  presidents,  they 
may  appoint  a  chairman  pro  tempore. 

During  a  prolonged  absence  or  inability  of  the  president, 
or  any  other  oflicer,  they  may  appoint  substitutes  pro  tem- 
pore, and  on  the  death  or  resignation  of  the  president,  or 
other  officer,  they  shall  fill  the  vacancy. 

Five  of  the  directors  shall  be  required  to  constitute  a 
quorum  for  the  transaction  of  business,  but  less  than  a 
quorum  may  adjourn  from  time  to  time  and  from  place  to 
place. 

The  board  of  directors  may,  at  their  option,  hold  their 
meeting  at  any  place  outside  of  the  state. 

Dividends  upon  the  capital  stock  of  the  company,  when 
earned,  shall  be  declared  by  the  board  of  directors  on  the 
first  Tuesday  of  February,  May,  August,  and  November  in 
each  year,  the  same  to  be  payable  on  the  fifteenth  of  the 
succeeding  month.  The  board  shall  have  power  to  fix  the 
amount  to  be  reserved  as  working  capital. 

ARTICLE  III. 

PRESIDENT. 

The  president  shall  preside  at  all  meetings  of  the  stock- 
holders or  directors,  if  present,  sign  all  certificates  of 
stock,  and  have  a  general  care,  supervision,  and  direction 


208  APPENDIX. 

of  the  affairs  of  the  company.  He  shall  have  power  to  call 
meetings  of  the  board  from  time  to  time,  when  he  shall 
think  proper,  or  when  requested  by  a  majority  of  the  board. 

In  the  event  of  the  death,  absence,  or  inability  of  the 
president  to  perform  any  duties  imposed  upon  him  by  these 
by-laws  and  the  order  of  the  board  of  directors,  a  vice 
president  may  exercise  his  powers  and  perform  his  duties, 
subject  to  the  control  of  the  board  of  directors. 

ARTICLE  IV. 

SECRETARY. 

It  shall  be  the  duty  of  the  secretary  to  notify  the  mem- 
bers thereof  of  all  meetings  of  the  board  of  directors  when 
required  by  the  president,  or  when  required  by  a  majority 
of  the  directors  in  writing;  to  attend  such  meetings  when 
practicable;  keep  true  records  of  the  votes  at  elections  and 
all  other  proceedings;  attest  such  records, after  every  meet- 
ing, by  his  signature ;  safely  keep  all  documents  and  papers 
which  shall  come  into  his  possession,  and  truly  keep  the 
books  and  accounts  of  the  company  appertaining  to  his 
oflQce,  and  shall  present  statements  thereof  when  required 
by  the  board.  He  shall  keep  books  upon  which  transfer  of 
stock  may  be  made  by  any  stockholder,  or  his  attorney  duly 
constituted  in  writing.  He  shall  prepare  new  certificates 
upon  the  transfer  of  shares  and  surrender  of  the  old  certifi- 
cates, and  keep  a  register  of  all  certificates  issued.  The 
assistant  secretary  shall  perform  such  of  these  duties  as 
the  directors  may  require. 


APPENDIX.  209 

ARTICLE  V. 
TREASURER. 

It  shall  be  the  duty  of  the  treasurer  to  keep  and  accourt 
for  all  moneys,  funds,  and  property  of  the  company  which 
shall  come  into  his  hands,  and  he  shall  render  such  ac- 
counts and  present  such  statements  to  the  directors  as  may 
be  required  of  him.  He  shall  deposit  all  funds  of  the  com- 
pany which  may  come  into  his  hands  in  such  bank  or  banka 
as  the  directors  may  designate;  he  shall  keep  his  bank  ac- 
count in  the  name  of  the  company,  and  shall  exhibit  his 
books  and  accounts  to  any  director  upon  application  at  the 
ofSce  during  ordinary  business  hours ;  he  sliall  indorse  for 
collection  the  bills,  notes,  checks,  and  other  negotiable  in- 
struments received  by  the  company;  he  shall  pay  out 
money  on  the  business  as  the  corporation  may  require,  tak- 
ing proper  vouchers  therefor ;  provided,  however,  that  the 
directors  shall  have  power,  by  resolution,  to  delegate  any 
of  the  duties  of  the  treasurer  to  other  officers,  and  to  pro- 
vide by  what  officers  all  bills,  notes,  checks,  vouchers,  or- 
ders, or  other  instruments  shall  be  signed.  The  assistant 
treasurer  shall  perform  such  of  these  duties  as  the  direct- 
ors may  require. 

ARTICLE  VI. 

CORPORATE  SEAL. 

A  corporate  seal  shall  be  prepared  and  shall  be  kept  by 
the  secretary  in  the  office  of  the  company. 

The  impression  of  the  seal  umy  be  made  and  attested  by 

Boisot  By  Laws — 14. 


210  APPENDIX. 

either  the  secretary  or  an  assistant  secretary  for  the  au- 
thentication of  contracts  and  other  papers  requiring  the 
seal  and  bearing  the  signature  of  the  president,  or  one  of 
the  vice  presidents. 

ARTICLE  VII. 

FISCAL  YEAR. 

The  fiscal  year  of  this  corporation  shall  be  the  calendar 
year. 

AETICLE  VIII. 

AMENDMENTS. 

These  by-laws  may  be  altered  or  amended  by  a  vote  of  the 
directors  at  any  meeting. 


BY-LAWS 

OF  THE 

IHEDERAL    STEEL    COMP^AJSTY. 


ARTICLE  I. 

OFFICE  AND  SEAL.      ' 

1.  The  title  of  the  corporation  is  "Federal  Steel  Com- 
pany." 

2.  The  principal  office  is  at  60  Grand  Street,  Jersey 
City,  New  Jersey. 

3.  The  corporate  seal  of  the  company  shall  have  inscrib- 
ed thereon  the  name  of  the  corporation,  the  state  (New 


APPENDIX.  211 

Jersey),  and  the  month  and  year  of  its  creation  (Septem- 
ber, 1898). 

ARTICLE  11. 

DIRECTORS. 

4.  The  property  and  business  of  the  corporation  shall 
be  managed  and  controlled  by  a  board  of  directors,  who 
shall  at  all  times  be  stockholders.  They  shall  hold  offlca 
for  one  year,  and  until  others  are  elected  and  qualified  in 
their  stead.  The  number  of  the  first  board  of  directors 
shall  be  three,  but  at  any  time  the  number  may  be  increased 
by  vote  of  the  board  of  directors,  and,  in  case  of  any  such 
increase,  the  board  of  directors  shall  have  power  to  elect 
such  additional  directors  to  hold  office  until  the  next  meet- 
ing of  stockholders,  or  until  their  successors  shall  be 
elected.  If  the  office  of  any  director  becomes  or  is  vacant 
by  reason  of  death,  resignation,  disqualification,  increase 
in  number,  or  otherwise,  the  remaining  directors,  by  a  ma- 
jority vote,  may  elect  a  successor,  who  shall  hold  office  for 
the  unexpired  term,  or  until  his  successor  is  elected. 

ARTICLE  III. 

MEETINGS  OF  STOCKHOLDERS. 

5.  The  annual  meeting  of  the  stockholders  shall  be  held 
on  the  first  Monday  of  April  in  each  year,  if  not  a  legal 
holiday,  and,  if  a  legal  holiday,  then  on  the  day  following, 
at  the  registered  office  of  the  company,  in  the  state  of  New 
Jersey,  commencing  at  11  o'clock  A.  M.,  when  they  shall 
elect  by  a  plurality  vote  by  ballot  the  full  board  of  direct- 


212  APPENDIX. 

ors  to  serve  for  one  year,  and  until  their  successors  are 
elected  or  chosen  and  qualified,  each  stockholder  being  en- 
titled to  one  vote  in  person  or  by  proxy  for  each  share  of 
stock  standing  registered  in  his  name  on  the  tenth  day  of 
the  month  preceding  the  election ;  provided,  no  stock  shall 
be  voted  which  has  been  transferred  within  twenty  days  of 
the  time  of  the  election. 

A  majority  in  amount  of  the  stock  outstanding  shall  be 
requisite  to  constitute  a  quorum  for  an  election  of  directors 
or  the  transaction  of  other  business. 

The  polls  for  such  election  shall  be  open  at  12  o'clock 
noon,  and  closed  at  1  o'clock  in  the  afternoon. 

Notice  of  the  annual  meeting  may  be  published  in  a 
newspaper  in  the  city  of  New  York  once  each  week  during 
the  calendar  month  next  preceding  the  meeting;  but  a  fail- 
ure to  publish  such  notice,  or  any  irregularity  in  the  pub- 
lication or  notice,  shall  not  affect  the  validity  of  the  said 
meeting  or  the  proceedings  therein. 

Special  meetings  of  stockholders  shall  be  called  by  the 
secretary  by  mailing  a  notice  at  least  five  days  prior  to  the 
date  of  meeting  to  each  stockholder  of  record  at  his  last- 
known  post-office  address,  on  the  request  in  writing,  or  by 
vote,  of  a  majority  of  the  board  of  directors  or  executive 
committee,  or  on  demand  in  writing  by  stockholders  of 
record  owning  a  majority  of  the  entire  issued  capital  stock 
of  the  company. 

ARTICLE  IV. 

MEETINGS  OF  DIRECTORS. 

6.     The  board  of  directors  shall  meet  at  the  office  of 


APPENDIX.  213 

the  company  in  New  York  immediately  after  the  adjourn- 
ment of  the  annual  meeting  of  stockholders,  and  elect  the 
officers  of  the  corporation  for  the  ensuing  year. 

Regular  meetings  of  the  directors  shall  be  held  at  the 
office  of  the  company  in  New  York,  or  by  order  of  the 
directors  elsewhere,  on  a  day  and  at  an  hour  to  be  fixed 
by  resolution  of  the  board. 

Notice  of  regular  meetings  shall  be  mailed  to  each  di- 
rector at  his  last  known  post-office  address  by  the  secretary 
at  least  three  days  previous  to  the  time  fixed  for  the  meet- 
ing. 

While  the  number  of  directors  remains  at  three,  a  ma- 
jority shall  be  necessary  to  constitute  a  quorum  for  the 
transaction  of  business;  but  if  the  number  of  directors 
shall  be  increased  to  fifteen,  then  six  shall  constitute  a 
quorum  for  the  transaction  of  business. 

Special  meetings  of  the  board  may  be  called  by  the  presi- 
dent on  one  day's  notice  to  each  director,  delivered  to  him 
personally,  or  left  at  his  residence  or  usual  place  of  busi- 
ness; or  such  special  meetings  may  be  called  in  like  man- 
ner on  the  written  request  of  three  members. 

ARTICLE  V. 

COMPENSATION    OF    DIRECTORS  AND   EXECUTIVE 
COMMITTEE. 

7.  Directors  and  members  of  the  executive  committee. 
as  such,  shall  not  receive  any  stated  salary  for  their  serv- 
ices, but  may  be  allowed  |10  each  for  attendance  at  eacii 
regular  or  special  meeting,  if  present  at  roll  call,  and  until 
adjournment,  unless  excused. 


214  APPENDIX. 

ARTICLE  VI. 
INSPECTORS  OF  ELECTION. 

9.  The  board  of  directors,  at  a  meeting  held  prior  to  the 
annual  meeting  of  the  stockholders,  shall  appoint  two 
stockholders  to  act  as  inspectors  and  conduct  the  election 
of  directors  at  the  ensuing  annual  meeting  of  stockholders. 
Inspectors  of  election  shall  not  be  eligible  to  the  office  of 
director.  If  any  inspector  of  election  fails  to  attend  the 
election,  a  successor  may  be  appointed  by  the  stockholders 
in  attendance. 

ARTICLE  Vn. 

ORDER    OF  BUSINESS. 

10.  The  order  of  business  at  the  meetings  of  the  board 
of  directors  shall  be  as  follows : 

(1)  A  quorum  being  present,  the  chairman  shall  call 
the  board  to  order. 

(2)  The  minutes  of  the  last  meeting  shall  be  read  and 
considered  as  approved  if  there  be  no  amendments. 

(3)  Reports  of  officers  of  the  company. 

(4)  Reports  of  committees. 

(5)  Unfinished  business. 

(6)  Miscellaneous  business. 

(7)  New  business. 

ARTICLE  Vni. 

OFFICERS    OF  THE   COMPANY. 

11.  The  officers  of  the  company  shall  consist  of  a  chair- 


APPENDIX,  215 

man  of  the  board,  president,  first  vice  president,  second 
vice  president,  secretary,  general  counsel,  treasurer,  audi- 
tor, and  such  other  oflBcers  as  may  from  time  to  time  be 
elected  or  appointed  by  the  board  of  directors. 
One  person  may  hold  more  than  one  office. 

ARTICLE  IX. 

OFFICERS. 

12.  The  directors  shall  elect  from  among  their  owq 
number  a  chairman  of  the  board,  a  president,  a  first  vice 
president,  and  a  second  vice  president,  and  shall  also  ap- 
point a  secretary,  treasurer,  auditor,  and  general  counsel. 

ARTICLE  X. 

DUTIES  OF  THE  CHAIRMAN. 

13.  It  shall  be  the  duty  of  the  chairman  to  preside  at 
all  meetings  of  the  board  of  directors,  and  to  give  such 
counsel  and  advice  as  from  time  to  time  may  by  him  be 
deemed  essential  to  the  best  interests  of  the  corporation 
to  the  executive  committee  or  to  the  president. 

ARTICLE  XI. 

DUTIES  OF  THE  PRESIDENT. 

14.  It  shall  be  the  duty  of  the  president,  in  the  absence 
of  the  chairman  of  the  board,  to  preside  at  all  meetings  of 
the  board  of  directors ;  to  have  general  and  active  manage- 
ment of  the  business  of  the  company;  to  see  that  all  orders 


216  APPENDIX. 

and  resolutions  of  the  board  are  carried  into  effect ;  to  exe- 
cute all  contracts  and  agreements  authorized  by  the  bo^rd ; 
to  keep  in  safe  custody  the  seal  of  the  company,  and,  when 
authorized  by  the  board  or  executive  committee,  to  affix 
the  seal  to  any  instrument  requiring  the  same,  which  seal 
shall  always  be  attested  by  the  signature  of  the  president 
and  of  the  secretary  or  the  treasurer.  He  may  sign  certifi- 
cates of  stock. 

He  shall  have  the  general  superintendence  and  direction 
of  all  the  other  officers  of  the  company,  except  the  chair- 
man of  the  board,  and  shall  see  that  their  duties  are  prop- 
erly performed. 

He  shall  submit  a  complete  report  of  the  operations  of 
the  company  for  the  year,  and  the  state  of  its  affairs  on  the 
31st  day  of  December,  to  the  directors  at  their  regular 
meeting  in  April  and  to  the  stockholders  at  their  annual 
meeting  in  April  of  each  year,  and  from  time  to  time  shall 
report  to  the  directors  all  matters  within  his  knowledge 
which  the  interests  of  the  company  may  require  to  be 
brought  to  their  notice. 

He  shall  be  ex  officio  a  member  of  all  standing  commit- 
tees, and  shall  have  the  general  powers  and  duties  of  super- 
vision and  management  usually  vested  in  the  office  of  the 
president  of  a  corporation. 

He  shall  in  a  general  way  be  familiar  with  and  exercise 
supervision  over  the  affairs  of  the  other  corporations  in 
which  this  corporation  may  be  interested. 

He  shall  freely  consult  and  advise  with  the  chairman  of 
the  board  and  also  the  executive  committee  in  relation  to 
the  business  and  interests  of  the  corporation. 


APPENDIX.  217 

ARTICLE  XII. 

FIRST    VICE  PRESIDENT. 

15.  The  first  vice  president  shall  be  vested  with  all  the 
powers  and  required  to  perform  all  the  duties  of  the  presi- 
dent in  his  absence.  He  may  sign  certificates  of  stock,  and 
he  shall  perform  such  other  duties  as  may  be  prescribed  by 
the  board  of  directors. 

ARTICLE  XIIL 
SECOND  VICE  PRESIDENT. 

16.  The  second  vice  president  shall  be  vested  with  all 
the  powers  and  required  to  perform  all  the  duties  of  the 
president  in  the  absence  of  both  the  president  and  the  first 
vice  president.  He  may  sign  certificates  of  stock,  and  he 
shall  perform  such  other  duties  as  may  be  prescribed  by 
the  board  of  directors. 

ARTICLE  XIV. 

PRESIDENT  PRO  TEM. 

17.  In  the  absence  of  the  president,  first  vice  president, 
and  the  second  vice  president,  the  board  may  appoint  a 
president  pro  tern. 

ARTICLE  XV. 

SECRETARY. 

18.  The  secretary  shall  be  ex  ofli,cio  secretary  of  the 
board  of  directors  and  of  the  standing  committees.     He 


218  APPENDIX. 

shall  attend  all  sessions  of  the  board,  shall  act  as  clerk 
thereof,  and  record  all  votes  and  the  minutes  of  all  pro- 
ceedings in  a  book  to  be  kept  for  that  purpose. 

He  shall  perform  like  duties  for  the  standing  committees 
when  required. 

He  shall  give  notice  of  all  calls  for  installments  to  be 
paid  by  the  stockholders,  and  shall  see  that  proper  notice 
is  given  of  all  meetings  of  the  stockholders  of  the  company 
and  of  the  board  of  directors,  and  shall  perform  such  other 
duties  as  may  be  prescribed  by  the  board  of  directors  or 
president. 

He  shall  be  sworn  to  the  faithful  discharge  of  his  duty, 
and  shall  give  such  bond  as  may  be  required  by  the  board 
of  directors. 

The  assistant  secretary,  if  one  is  appointed,  shall  be 
vested  with  all  the  powers  and  required  to  perform  all  the 
duties  of  the  secretary  in  his  absence,  inability,  refusal,  or 
neglect  to  act. 

ARTICLE  XVI. 

TREASURER. 

19.  The  treasurer  shall  keep  full  and  accurate  accounts 
of  receipts  and  disbursements  in  books  belonging  to  the 
company,  and  shall  deposit  all  moneys  and  other  valuable 
effects  in  the  name  and  to  the  credit  of  the  company  m  such 
depositaries  as  may  be  designated  by  the  board  of  directors 
or  executive  committee. 

He  shall  disburse  the  funds  of  the  company  as  may  be 
ordered  by  the  board,  taking  proper  vouchei*s  for  such  dis- 


APPENDIX.  219 

bursements,  and  shall  render  to  the  president  and  directors 
at  the  regular  meetings  of  the  board,  or  whenever  they  may 
require  it,  an  account  of  all  his  transactions  as  treasurer, 
and  of  the  financial  condition  of  the  company,  and  at  the 
regular  meeting  of  the  board  in  April  annually  a  like  re- 
port for  the  preceding  year. 

He  shall  give  the  company  a  bond  in  form  and  in  a  sum 
and  with  security  satisfactory  to  the  board  of  directors  or 
the  executive  committee  for  the  faithful  performance  of  the 
duties  of  his  office  and  the  restoration  to  the  company,  in 
case  of  his  death,  resignation,  or  removal  from  office,  of 
all  books,  papers,  vouchers,  money,  or  other  property  of 
whatever  kind  in  his  possession  belonging  to  the  corpora- 
tion, and  containing  such  other  provisions  as  the  board  of 
directors  or  executive  committee  may  require. 

Certificates  of  stock,  when  signed  by  the  president  or 
first  vice  president  or  second  vice  president  shall  be  coun- 
tersigned by  the  treasurer.  He  shall  keep  the  accounts  of 
stock  registered  and  transferred  in  such  form  and  manner 
and  under  such  regulations  as  the  board  of  directors  may 
prescribe. 

The  assistant  treasurer,  if  one  is  appointed,  shall  be  vest- 
ed with  all  the  powers  and  required  to  perform  all  the 
duties  of  the  treasurer  in  his  absence,  inability,  refusal,  or 
neglect  to  act. 

AETICLE  XVn. 
AUDITOR. 

20.     The  auditor  shall  have  supervifdon  over  all  the  ac- 


220  APPENDIX. 

counts  and  account  books  of  the  company,  and  see  that  the 
system  of  keeping  the  same  is  enforced  and  maintained. 

He  shall  direct  as  to  forms  and  blanks  relating  to  books 
and  accounts  in  all  departments,  and  no  change  shall  bo 
made  without  his  consent,  or  the  consent  of  the  president 
or  executive  committee. 

He  shall  see  that  there  is  kept  in  the  bookkeeping  depart- 
ment a  set  of  books  containing  a  complete  record  of  all 
business  transactions  of  the  company  pertaining  to  ac- 
counts. 

He  shall,  when  requested,  furnish  the  executive  commit- 
tee or  president  a  statement  of  the  earnings  and  expenses  ^ 
of  the  corporation  or  any  other  company  in  which  this  cor- 
poration may  be  interested  for  any  given  time,  and  shall 
keep  books  and  records  for  the  purpose  of  furnishing  such 
statistics. 

He  shall  verify  the  assets  reported  by  the  treasurer  or 
his  assistant  at  least  twice  a  year,  and  make  report  of  the 
same  to  the  executive  committee. 

He  shall  cause  the  books  and  accounts  of  all  oflQcers  and 
agents  charged  with  the  receipt  or  disbursement  of  money 
tx)  be  examined,  and  shall  ascertain  whether  or  not  the  cash 
and  vouchers  covering  the  balance  are  actually  on  hand. 

He  shall  render  such  assistance  and  advice  as  the  presi- 
dent or  executive  committee  may  desire  concerning  tlie 
books  and  accounts  and  system  of  financial  transactions  of 
all  other  corporations  in  which  this  corporation  is  inter- 
ested, and  furnish  to  the  president  or  executive  committee 
such  statements  concerning  the  same  as  may  be  requested 
by  them. 


APPENDIX.  221 

In  case  of  a  default  within  his  information  at  any  time 
he  shall  at  once  notify  the  president  and  chairman. 

ARTICLE  XVin. 

GENERAL  COUNSEL. 

21.  The  general  counsel  shall  be  the  legal  adviser  of  the 
company,  and  shall  perform  such  services  and  receive  such 
compensation  as  may  be  determined  by  the  board  of  direct- 
ors or  the  executive  committee. 

ARTICLE  XIX. 
DUTIES  AS  OFFICERS  MAY  BE  DELEGATED. 

22.  In  case  of  the  absence  of  any  officer  of  the  company, 
the  board  of  directors  or  the  executive  committee  may 
delegate  his  powers  or  duties  to  any  other  officer  or  to  any 
director  for  the  time  being. 

EXECUTIVE  COMMITTEE. 

23.  There  shall  be  an  executive  committee  of  five  direct- 
ors, selected  by  the  board,  who  shall  meet  at  regular 
periods,  or  on  notice  to  all  by  any  of  their  own  number. 
They  shall  advise  with  and  aid  the  officers  of  the  company 
in  all  matters  concerning  its  interests  and  the  manage- 
ment of  its  business ;  and  when  the  board  of  directors  is  not 
in  session,  the  executive  committee  shall  have  and  may  ex- 
ercise all  the  powers  of  the  board  of  directors. 

The  executive  committee,  unless  otherwise  provided  hy 


222  APPENDIX. 

the  board  of  directors,  shall  fix  the  salaries  or  compensa- 
tion of  all  officers. 

The  executive  committee  shall  keep  regular  minutes,  and 
cause  them  to  be  recorded  in  a  book  kept  in  the  office  of  the 
company  for  that  purpose,  and  report  the  same  to  the 
board  of  directors  whenever  required  by  them. 

ARTICLE  XXI. 

TERM  OF  OFFICE. 

.  24.  Each  officer  shall  hold  his  office  only  during  the 
pleasure  of  the  board  of  directors,  unless  otherwise  |..a- 
vided  by  special  agreement  in  writing  signed  by  a  majority 
of  the  executive  committee. 

ARTICLE  XXn. 

TRANSFER  OF  STOCK. 

25.  All  transfers  of  stock  of  the  corporation  shall  be 
made  upon  the  books  of  the  company  by  the  holder  of  the 
shares  in  person,  or  by  his  legal  representative;  but  no 
transfer  of  stock  shall  be  made  within  ten  days  next  preced- 
ing the  day  appointed  for  paying  a  dividend. 

ARTICLE  XXIII. 

CERTIFICATES  TO  BE  CANCELLED. 

26.  Certificates  of  stock  surrendered  shall  be  cancelled 
by  the  transfer  agent  at  the  time  of  transfer. 


APPENDIX.  223 

ARTICLE  XXIV. 
LOSS  OF  CERTIFICATE. 

27.  Any  person  claiming  a  certificate  or  evidence  of 
stock  to  be  issued  in  place  of  one  lost  or  destroyed  shall 
make  an  affidavit  or  affirmation  of  that  fact,  and  advertise 
the  same  in  such  newspaper  and  for  such  space  of  time  as 
the  board  of  directors  may  require,  describing  the  certifi- 
cate, and  shall  furnish  the  company  with  proof  of  publica- 
tion by  the  affidavit  of  the  publisher  of  the  newspaper,  and 
shall  give  the  board  a  bond  of  indemnity  in  form  approved 
by  the  board,  with  one  or  more  sureties,  if  required,  in 
double  the  par  value  of  such  certificate,  whereupon  the 
president  and  treasurer  may,  one  month  after  the  termina- 
tion of  the  advertisement,  issue  a  new  certificate  of  the 
same  tenor  with  the  one  alleged  to  be  lost  or  destroyed,  but 
always  subject  to  the  approval  of  the  board  of  directors. 

ARTICLE  XXV. 
CONTRACTS  AND  AGREEMENTS. 

28.  No  agreement,  contract,  or  obligation  (other  than  a 
cheque)  involving  the  payment  of  money  or  the  credit  or 
liability  of  the  company,  for  more  than  |5,000,  shall  be 
made  without  the  approval  of  the  board  of  directors  or  of 
the  executive  committee. 

ARTICLE  XXVI. 

CHEQUES  FOR  MONEY. 

29.  All  cheques,  drafts,  or  orders  for  the  payment  of 


224  APPENDIX. 

money  shall  be  signed  by  the  treasurer  and  countersigned 
by  the  chairman  of  the  board  or  president  or  first  or  second 
vice  president. 

No  cheque  shall  be  signed  by  both  the  treasurer  and 
chairman  or  president  or  a  vice  president  in  blank. 

ARTICLE  XXVn. 
BOOKS  AND  RECORDS. 

30.  The  books,  accounts,  and  records  of  the  company 
shall  be  open  to  inspection  by  any  member  of  the  board  of 
directors  at  all  times;  and  stockholders  may  inspect  the 
books  of  the  company  at  such  times  only  as  the  executive 
committee  or  board  of  directors  may  by  resolution  desig- 
nate. 

ARTICLE  XXVUL 

A.LTERATION  OF  BY-LAWS. 

31.  The  board  of  directors,  by  a  vote  of  a  majority  of 
the  members  present  at  any  meeting,  may  alter  or  amend 
these  by-laws,  but  no  alteration  shall  be  made  unless  pro- 
posed at  a  meeting  of  the  board,  and  considered  at  subse- 
quent meetings. 

ARTICLE  XXIX. 
STOCK  OF  OTHER  COMPANIES. 

None  of  the  shares  of  the  capital  stock  of  the  Minnesota 
Iron  Company,  the  Illinois  Steel  Company,  the  Lorain 
Steel  Company,  or  the  Elgin,  Joliet  and  Eastern  Railway 


APPENDIX  225 

Company  shall  hereafter  at  any  time  or  times  be  sold,  as- 
signed, transferred,  pledged,  mortgaged,  or  incumbered  by 
the  directors  of  the  Federal  Steel  Company  without  mak- 
ing at  least  sixty  days'  previous  publication  in  two  prom- 
inent daily  newspapers  published  in  the  city  of  New  Yor': 
of  the  intention  to  make  such  sale,  transfer,  assignment, 
pledge,  mortgage,  or  incumbrance;  and  also,  at  the  date 
of  the  first  publication,  filing  a  similar  written  notice  with 
the  chairman  and  secretary,  respectively,  of  the  said  com- 
mittee on  stock  lists;  and  also  obtaining  the  consent  of 
those  holding  a  majority  in  amount  of  the  shares  of  stock 
of  the  Federal  Steel  Company,  by  vote  at  a  meeting  regu- 
larly called  and  notice  mailed  to  each  stockholder  at  hia 
usual  or  last  known  place  of  business  or  residence  at  least 
thirty  days  before  the  time  of  meeting. 

The  shares  of  the  capital  stock  of  the  said  Minnesota 
Iron  Company,  Illinois  Steel  Company,  Lorain  Steel  Com- 
pany, and  Elgin,  Joliet  and  Eastern  Kailway  Company 
shall  be  placed  and  held  in  the  name  of  some  person  or  per- 
sons designated  by  vote  of  the  directors  of  the  Federal 
Steel  Company  to  act  as  trustee  therefor,  and  the  certifi- 
cates for  said  shares  shall  provide  by  indorsement  thereon 
that  they  are  issued  and  can  be  transferred  only  in  pui'su- 
ance  of  the  provisions  of  this  by-law. 

This  by-law  shall  never  be  repealed,  amended,  or  modi- 
fied except  by  consent  of  a  majority  of  the  stockholders  of 
the  Federal  Steel  Company,  obtained  by  vote  at  a  meeting 
held  pursuant  to  notice,  stating  the  time,  place,  and  objf<-i 
of  the  meeting,  and  mailed  to  each  stockholder  at  his  usual 

Boisot  By  Laws     x5. 


226  APPENDIX. 

or  last  known  place  of  business  or  residence  at  least  thirty 
days  before  the  time  of  meeting. 

This  first  board  of  directors  of  the  Federal  Steel  Com- 
pany hereby  distinctly  waives,  abrogates,  and  relinqui^es, 
both  for  themselves  and  their  successors,  all  rights  and 
powers  conferred  by  the  articles  of  incorporation  of  the 
Federal  Steel  Company  which  may  not  be  in  accordance 
herewith,  either  as  to  amendment  of  by-laws,  or  disposition 
of  above-named  property. 

ARTICLE  XXX. 
DIVIDENDS. 

The  following  specific  days  are  hereby  fixed  for  declar- 
ing dividends  upon  the  common  and  preferred  stock  of  the 
Federal  Steel  Company,  namely :  The  second  Tuesdays  in 
January,  February,  March,  April,  May,  June,  July,  Au- 
gust, September,  October,  November,  and  December  in 
each  and  every  year ;  providing,  howev^,  that  no  dividends 
shall  be  declared  except  as  permitted  by  law  and  by  the 
provisions  of  the  certificate  of  incorporation  of  the  com- 
pany; and  provided,  further,  that  no  dividend  shall  be  de- 
clared or  paid  except  from  accumulated  profits  excluding 
the  sum  or  sums  reserved  as  working  capital. 


TABLE  OF  CASES. 


[KEFEBENCES  ARK  TO  PAGES.] 


A.  A.   Grifflng  Iron   Co.,   In  re 57 

A.  O.  U.  W.  V.  Brown 148 

Ackenhausen  v.  People's  Sav.  Bank 158 

Adley  v.  Reeves 90,  174 

V.  Whitstable  Co 6,  90 

Adriance  v.  Roome 116,  162 

Albers    v.    Merchants'    Exchange 87 

Allen  V.  Williamsburgh  Sav.  Bank 102 

Allnutt  V.  Subsidiary  High  Court  of  Foresters 41,  51 

Alters   V.   Journeyman   Bricklayers'   Protective   Ass'n 45,   48,  93 

American  B.  &  L.  Ass'n  v.  Mordock 186 

American  Council,  No.  107,  v.  National  Council,  O.  U.  A.  M 175 

American  L.  S.  C.  Co,  v.  Chicago  L.  S.  Exchange 159 

American  Legion  of  Honor  v.  Perry 33 

American  Nat.  Bank  v.  Oriental  Mills 23 

Amesbury  v.  Bowditch  Mut.  Fire  Ins.  Co 77,  95,  98,  129 

Anacosta  Tribe  No.  12  v.  Murbach 4,  46,  126,  176 

Andes  Ins.  Co.  v.  Waters 48,  68 

Andrews  v.  Union  Mut.  Fire  Ins.  Co 39 

Anglo-Californian  Bank  v.  Grangers'  Bank 70,  161 

Anthony  v.  Massachusetts  Ben.  Ass'n 20 

Appelby  v.   Erie   County   Sav.   Bank 119,  158 

Arapahoe  C.  &  L.  Co.  v.  Stevens 53,  125,  126,  160,  164 

Ash  V.  Methoditjt  Church 175 

Ashley  Wire  Co.  v.  Illinois  Steel  Co 55.  102,  164 

Asiatic  Banking  Corp.,  In  re 17,  22,  160 


228  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

Atnip  V.  Tennessee  Mfg.  Co 2J,  lit 

Atwater  v.  American  Exch.  Nat.  Bank 164 

Audette  v.  L'Union  St.  Joscrh 112 

Austin  V.  Butcher 175 

V.  Searing 42,     92 

B 

Bachman,  In  re 69,  70,  98,  166,  167 

Bachmann  v.  New  Yorker  D.  A.  B 175 

Badesch  v.  Congregation  B.  of  W 95,     98 

Bailey  v.  Master  Plumbers 84 

Baldwin   v,    Begley 139,  157 

Baltimore  B.  &  L.  Ass'n  v.  Powhatan  Imp.  Co 6,     41 

Bank  v.   Lanier 67,    73 

Bank  of  Attica  v.  Manufacturers'  &  Traders'  Bank 7,    71 

Bank  of  Holly  Springs  v.  Pinson 2,  8,  16,  17,  22,  69,  70,  117,  160,  166 

Bank  of  Little  Rock  v.  McCarthy 185 

Bank  of  Wilmington  v.  Wollaston 124,  188 

Barnes  v.  Black  Diamond  Coal  Co 160 

Bartling  v.  Edwards 27 

Bauer's   Appeal 176 

Baur  V.  Samson  Lodge 126,  127,  135 

Beach  v.  Co-operative  S.  &  L.  Ass'n 127 

Bearden  v.  People's  B.,  L.  &  S.  Ass'n 97,  138,  151 

Becker  v.  Berlin  Ben.  Soc 140,  152 

V.  Farmers'  Mut.  Fire  Ins.  Co 141,  143,  144,  150,  153 

Beers  v.  New  York  Life  Ins.  Co 101 

Belfast  &  W.  L.  R.  Co.  v.  City  of  Belfast 136 

Belton  V.  Hatch 130 

Bergman  v.  St.  Paul  Mut.  Bldg.  Ass'n 38,  73,  142 

Berkhout  v.  Supreme  Council,  R.  A 178 

Bishop  V.  Globe  Co 63,  134 

Bixby  V.  Grand  Lodge,  A.  O.  U.  W 107 

Black  &  White  Smith's  Soc,  v.  Vandyke 2 

Blumenfeldt  v.  Karschuck 178 

Board  of  Trade  v.  Nelson 180 

V.   Riordan 47 


TABUS  OF  CASES.  229 

REFERENCES  ARE  TO  PAGES. 

Bocock's  Ex'r  v.  Alleghany  C.  &  I.  Co 161 

Bohm  V.  Loewer's  G.  T.  Co 163 

Booz'  Appeal 40 

Borgards  v.  Farmers'  Mut.  Ins.  Co 139 

Borgraefe  v.  Supreme  Lodge,  K.  &  L.  of  H 174 

Boutwell  V.  Marr 132 

Bowie  V.  Grand  Lodge,  K.  of  W 138 

Bowlin  V.  Sovereign  Camp  of  W.  W 28 

Bradbury  v.  Wild 138 

Brady  v.  Coachman's  Benev.  Ass'n 45,  47,  93 

Brendon  v.   Worley 98 

Breneman  v.  Franklin  Beneficial  Ass'n 135 

Brent  v.  Bank  of  Washington 69,  130 

Brewer  v.  Chelsea  Mut.  Fire  Ins.  Co 25 

Brewster  v.  Hartley 59 

V.  Miller 86 

BrinkerhofE-Farris  T.  &  S.  Co.  v.  Home  Lumber  Co 6G,  166 

Brotherhood  of  Railroad  Trainmen  v.  Newton 24,  96,  141 

Brown  v.  De  Young 54 

V.  Republican  Mountain  Silver  Mines 38 

Bryon  v.  Carter 71 

Budd  V.  Multnomah  Street  Ry.  Co 3,  5,  41,  48 

Buecking  v.  Blum  Lodge,  I.  O.  O.  F 47,  93 

Building  &  Loan  Ass'n  v.  Dorsey 33 

BuUard  v.  Bank 73 

Burden  v.  Burden 43,  132 

Burlington  Voluntary  R.  D.  v.  White 20 

Butchers'  Ben.  Ass'n 33 

Byram  v.  Sovereign  Camp,  W.  of  W 177 


Cahill  V.  Kalamazoo  Mut.  Ins.  Co 12,  13,  91.  172 

Calder  &  Hebble  Navigation  Co.  v.  Pilling 50 

Came  v.  Brigham. ., 4.  52.  127 

Campbell  v.  Merchants'  ft  Farmers'  Mut.  Fire  Ins.  Co. .  .18,  118,  122,  130 

Canfield  v.  Great  Camp,  K.  of  M 46,  176 

Cannon  v.  Farmers'  Mut.  Fire  Ass'n 65,  124 


230  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

Card  V.  Carr 45,  174 

Carlisle  v.  Saginaw,  V.  &  St.  L.  R.  Co 186 

Carney  v.  New  York  Life  Ins.  Co 21,  96,  97,  100 

Carroll  v.  Mullanphy  Sav.  Bank 10,  186 

Cartan  v.  Father  Matthew  U.  B.  Soc 47,  93,  97 

Carter  v.  Sanderson 52 

Case  of  Tailors,  etc.,  of  Ipswich 85 

Castner  v.  Twltchell-Champlin  Co 60,  104 

Catholic  Knights  v.  Kuhn 170 

Catholic  Order  of  Foresters  v.  Fitzpatrick 92 

Chambersburg  Ins.  Co.  v.  Smith 19,  117 

Chapman  v.  Young 7 

Charch  v.  Charch 108 

Chemical  Nat.  Bank  v.  Colwell 19,  23,  65 

Cheney   v.   Ketcham 129,  176 

Child  V.  Hudson's  Bay  Co 5,  39,  68,  69,  72,  90,  172 

Citizens'  Bldg.  Ass'n  v.  Coriell 123 

Citizens'  Mut.  Fire  Ins.  Co.  v.  Sortwell 123 

Citizens'  State  Bank  v.  Kalamazoo  County  Bank 71 

Claflin  V.  Farmers'  &  Citizens'  Bank 52,  99 

Clark  V.  Le  Cren 85 

V.  Lehman  143 

V.  Mutual  R.  F.  Life  Ass'n 143 

Coffee  V.  Southwark  Beneficial  Soc 178 

Coles  V.  Iowa  State  Mut.  Ins.  Co 129 

Commissioners  v.  Gas  Co 41,  42 

Commonwealth  v.  Cain 75 

V.  Detwiller   44,  59 

V.  Fisher 38 

V.  Gill 38,  41,  42,  78 

V.  St.  Patrick  Benev.  Soc 50,  51,  92 

V.  Turner 1 

V.  Union  League 180 

V.  Woelper 60,  187 

Company  of  Homers  v.  Barlow 5 

Company  of  Tobacco  Pipe  Makers  v.  Woodroffe 61,  90 

Compton  V.  Van  Volkenburg 97 

Condon  v.  Mutual  R.  F.  Life  Ass'n 143 


TABLE  OF  CASES.  231 

REFERENCES  ARE  TO  PAGEa 

Conklin  v.  Second  Nat.  Bank 73 

Connell  v.  Stalker 137 

Conniff  v.  Jamour 42,   80,  128 

Conway  v.  Supreme  Council,  C.  K.  of  A 143 

Cooper  V.  Frederick - 74 

Corbett  v.  Woodward 57,  102 

Corley  v.  Travelers*  Protective  Ass'n 15 

Comick  V.  Richards 64 

Cotter  V.  Grand  Lodge,  A.  O.  U.  W 169 

Cotton  Jammers'  &  Longshoremen's  Ass'n,  No.  2,  v.  Taylor 177 

Covenant  Mut.  Ben.  Ass'n  v.  Spies 24,  116,  126 

Covenant  Mut.  Life  Ass'n  v.  Kentner 141,  144,  148 

V.  Tuttle 143,  144,  149 

Cowan  V.  New  York  Caledonian  Club 45,     94 

Coyle  V.  Father  Matthew  T.  A.  B.  Soc 141,  153 

Crittenden  v.  Southern  Home  B.  &  L.  Ass'n 127 

Croak  v.  High  Court,  I.  O.  F 1/5 

Cross  v.  West  Virginia,  C.  &  P.  Ry.  Co 47,     53 

Crumpton  v.  Pittsburg  Council,  No.  117 5,     49 

Cudden  v.  Estwick 2 

Cummings  v.  Webster 3,  161 

Cunningham  v.  Alabama  Life  Ins.  &  T.  Co 4,  33,     69 

Currier  v.  Continental  Life  Ins.  Co 17 

D 

* 

Dabney  r.  Stevens 162 

Dane  r.  Young 65,     68 

Daniher  v.  Grand  Lodge,  A.  0.  U.  W 24,  29,  177 

Daughtry  v.  Knights  of  Pythias 138 

Davidson  r.  Old  People's  Mut.  Ben,  Soc 18,  130 

Dayis  v.  Atkinson 117 

T.  Proprietors  of  Meeting  House 74 

V.  Rockingham  Inv,  Co 21,  161 

Dawklnc  v.  Antrobus 180 

De  Host  V.  Albert  Palmer  Co 163,  187 

Delaney  v.  Delaney 24 

V.  Sandhurst  Ben.  Bldg.  &  Inv.  Soc 100 


232  TABLE  OF  CASES, 

REFERENCES  ARE  TO  PAGEa 

Delaware,  L.  &  W.  R.  Go.  v.  Oxford  Iron  Co 73 

Demings  v.  Supreme  Lodge,  K.  of  P 106 

Des  Moines  Nat.  Bank  v.  Warren  County  Bank 159 

Despatch  Line  of  Packets  v.  Bellamy  Mfg.  Co 124 

Dickenson  v.  Chamber  of  Commerce 43,  81,     93 

Di  Messiah  v.  Gem 39 

Diligent  Fire  Co.  v.  Commonwealth 78,  177 

District  Grand  Lodge  v.  Cohn 9,  14,  184 

District  Grand  Lodge,  No.  4,  O.  K.  S.  B.,  v.  Menken 107 

Dobson  V.  Hall 170 

V.  More 58 

Dolan  V.  Court  of  Good  Samaritan 121,  135 

Donovan  v.  Halsey  Fire  Engine  Co 119 

Domes  v.  Supreme  Lodge,  K.  of  P 2,  3,  6,     41 

Drake  v.  Hudson  River  R.  Co 3 

Driscoll  V.  West  Bradley  &  C.  M.  Co 42,  71,  161 

Drum  V,  Benton 143 

Du  Quoin  Star  C.  M.  Co.  v.  Thorwell 188 

Duer  V.  Supreme  Council,  O.  of  C.  F 138 

Dunkerson,  In  re 73 

Dunston  v.  Imperial  Gas  Light  &  C.  Co 4,      9 

Dupuy  V.  Eastern  B.  &  L.  Ass'n 40,    87 

Durkee  y.  People 34 

E 

East  Tennessee  ft  V.  R.  Co.  v.  Gammon 13f 

Eastern  B.  &  L.  Ass'n  v.  Olmsted 96 

V.  Snyder 138 

Ebert  v.  Mutual  R.  F.  Life  Ass'n 142,  143,  147 

Election  of  Directors  of  Rapid  Transit  Ferry  Co 103 

EUerbe  v.  Faust 139 

Ellis  V.  North  Carolina  Inst,  for  Deaf  &  Dumb  &  Blind 21,  47,  124 

Ellsworth  Woolen  Mfg.  Co.  v.  Faunce 60,  104 

Elsas  V.  Alford 42 

Emery  v.  Boston  Marine  Ins.  Co 164 

Emmons  v.  Hope  Lodge,  No.  21,  I.  O.  O.  F 129 

Engelhardt  v.  Fifth  Ward  P.  D.  S.  &  L.  Ass'n 4,  138,  151 


TABLE  OP  CASES.  233 

REFERENCES  ARE  TO  PAGES. 

Enterprise  B.  &  L.  Soc.  t.  Bolin 152 

Erd  V.  Bavarian  N.  A.  &  R.  Ass'n 177 

Espy  V.  American  Legion  of  Honor 126,  188 

Evans  v.  Philadelphia  Club 180 

Evansville  Nat.  Bank  v.  Metropolitan  Nat.  Bank 73 

F 

Falcone  v.  Socleta  Sartl  Italiani  di  Mutuo  Soccorso 41,     45 

Farmer  v.  Board  of  Trade 180 

Farmers'  &  Merchants'  Bank  v.  Wasson 48,     66 

Farmers'  &  Traders'  Bank  v.  Haney 71 

Fay  V.  Noble 125,  164 

Fee  V.  National  Masonic  Ace.  Ass'n 15,     62 

Feltmakers  v.   Davis 173 

Fields  V.  United  Brotherhood  of  C.  &  J 55,     62 

Fifth  Nat.  Bank  v.  Navassa  Phosphate  Co 163 

Fillmore  v.  Great  Camp,  K.  of  M 176,  178 

Finch  V.  Grand  Grove,  U.  A.  O.  of  D 96 

Fire  Ins.  Co.  v.  Connor 141 

Fitzgerald  v.  Equitable  R.  F.  Life  Ass'n 18 

V.  Metropolitan  Ace.  Ass'n 129 

Flicek  V.  High  Court,  C.  O.  of  F 27 

Flint  V.  Pierce 6,  133 

Folmer's  Appeal 140 

Forest  City  U.  L.  &  B.  Ass'n  v.  Gallagher 87 

Foster  v.  Mullanphy  Planing-Mill  Co 58 

Framework  Knitters  v.  Green 48,     52 

Frank  v.  Morrison 187 

Franklin  Beneficial  Ass'n  v.  Commonwealth 83,     96 

Freckman  v.  Supreme  Council,  R.  A 174 

French  v.  Society  Select  Guardians 143 

Prltz  V,  Muck 42.     47 

Fritze  v.  Equitable  B.  &  L.  Soc 14 

Fugure  v.  Mutual  Society  of  St.  Joseph 137,  15") 

Fullenwider  v.  Supreme  Council  of  R.  L 138,  144,  145 


234  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

G 

Gallatin    v.    Bradford 168 

Gardner  v.  Preemantle 176 

Garretson  v.  Equitable  Mut.  L.  &  E.  Ass'n 123 

Geyer  v.  Western  Ins.  Co 69 

Given  v.  Rettew 143 

Glover  v.  Lodge 147 

Goddard  v.  Merchants'  Exchange 6,  37,  41,     43 

Gordon  v.  Muchler 33,  159,  167 

Gosling  V.  Veley 34 

Gouchenour  v.  Sullivan  B.  &  L.  Ass'n 89 

Graf  Strom  v.  Frost  Council,  No.  21,  O.  of  C.  F 140,  147,  153 

Graham  v.  House  B.  &  L.  Ass'n 41,    87 

Grand  Castle  v.  Bridgeton  Castle 175 

Grand  Cent.  Lodge,  No.  297,  v.  Grogan 176,  177 

Grand  Commandery  of  Massachusetts  v.  Stewart 178 

Grand  Lodge  v.  Ohnstein 108 

Grand  Lodge,  A.  0.  U.  W.,  v.  Noll 107 

T.    Reneau 26 

v.   State 142 

Grand  Lodge,  I.  O.  of  M.  A.,  v.  Besterfield 105 

Grand  Lodge,  K.  of  P.,  v.  People 175,  180 

Granger,   In  re 45,     50 

Grant  v.  George  C.  Treadwell  Co 163 

V.   LangstafE    178 

Graves  v.  Colby 90,  172,  173 

Gray  v.  Christian  Soc 75,  lie,  134,  175 

V.  Supreme  Lodge,  K.  of  H 160 

Great  Falls  Mut.  Fire  Ins.  Co.  v.  Harvey 38,  76,  131,  153 

Green  v.  Board  of  Trade 178 

Greenspau  v.  American  Star  Order 187 

GrifRng  Iron  Co.,  In  re 57 

Grimbley  v.  Harrold 17q 

Gundlach  v.  Germania  Mechanics'  Ass'n 140,  148,  155 

Gunmakers'  Soc.  v.  Fell 83      98 


TABLE  OF  CASES.  235 

BBFKKKNCKS  ARB  TO  PAQES. 

H 

Haden  v.  Fanners'  &  Mechanics'  Fire  Ass'n 161 

Hadley  v.  Odd  Fellows'  Beneficial  Ass'n 110 

Haebler  v.  New  York  Produce  Exchange 46,  176 

Hagerman  v.  CMiio  B.  &  S.  Ass'n 12,     87 

Hale  V.  EJquitable  Aid  Union 140 

Hamilton  Mut.  Ins.  Co.  v.  Hobart 153 

Hanna  v.  Hanna Ill 

Hansen  v.  Supreme  Lodge,  K.  of  H 106 

Hanson  v.  Minnesota  Scandinavian  Relief  Ass'n 26 

Harrington  v.  Keystone  Mut.  Ben.  Ass'n 102 

V.  Workingmen's  Ben.  Ass'n 44,     77 

Hartford  v.  Co-operative  Mut.  Homestead  Co 95 

Harvey  v.  Grand  Lodge,  A.  O.  U.  W 20 

Hass  V.  Mutual  Relief  Ass'n 143 

Hastings  v.  Blue  Hill  Turnpike  Corp 119 

Haven  v.  New  Hampshire  Asylum 186 

Head  v.  Supreme  Council,  C.  K 134 

Heintzelman  v.  Druids'  Relief  Ass'n 14 

Helbig  v.  Rosenberg 55 

Hembeau  v.  Great  Camp,  K.  of  M 176 

Henry   v.    Jackson 14 

Herbert  v.  Kenton  Bldg.  &  Sav.  Ass'n 33 

Herman  v.  Plummer 17,  178 

Herring  v.  Ruskin  Co-operative  Ass'n 66 

Hibernia  Fire  Engine  Co.  v.  Commonwealth 96.  97,  140,  146 

v.  Harrison 48,  61,  96,  97,  131 

High  Court,  C.  O.  of  F.,  v.  Malloy 109 

High  Court,  L  O.  F.,  v.  Heath 187 

T.  Zak 181 

Hirsch  v.  United  States  Grand  Lodge,  O.  of  B.  A 128 

Hoblyn  v.  Rex 38 

Hoeftner  t.  Grand  Lodge,  G.  O.  H 175 

Holmany  v.  National  Slavonic  Soc 179 

Holyoke  B.  &  L.  Ass'n  v.  Lewis 142.  152 

House  V.  Eastern  B.  &  L.  Ass'n 138,  145 


236  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

Hoyt  V.  Sbelden 53,  59,  103 

v.  Thompson  53,     59 

V.  Thompsan's  Ex'r 103 

Hughes  V.  Farmers'  S.  &  B.  &  L.  Ass'n 89 

V.  Parker 185 

V.  Wisconsin  Odd  Fellows'  Mut,  Life  Ins.  Co 10,  138,  144 

Hunter  y.  Sun  Mut.  loB.  Co 21,  46,  124 

Hussey  v.  Gallagher 90,  174,  176 

Huston  V.  Rentlinger 84 

Hysinger  v.  Supreme  Lodge,  K.  St  L.  of  H 139,  167 

I 

Illinois  Conference  v.  Female  College 142 

In  re  A.  A.  Griffing  Iron  Co 57 

Asiatic  Banking  Corp 17,  22,  160 

Bachman 69,  70,  98,  166,  167 

Dunkerson  73 

Election  of  Directors  of  Rapid  Transit  Ferry  Co 103 

Granger 45,     50 

Klaus 10,  14,  66,  131 

Lighthall  Mfg.  Co 58 

*      Long  Island  R.  Co 91 

Lurman 33 

National  Home  B.  &  L.  Ass'n 140 

Peebles    71 

Skandinaviska   2 

Independent  Order  of  Foresters  v.  Haggerty 29,  174 

V.  Keliher    108 

Industrial  Trust  Co.  v.  Green 121 

Insurance  Co.  v.  Connor 148,  149 

International  B.  L.  &  I.  Union  v.  King 34 

International  B.  &  L.  Ass'n  v.  Abbott IS,  130 

V.   Braden    141 

Inter-Ocean  Pub.  Co.  v.  Associated  Press 85 

Interstate  B.  &  L.  Ass'n  v.  Hafter 140 

V.  Hunter 127 

y.  Ouzts  140 


TABLE  OF  CASES.  237 

REFERENCES  ARE  TO  PAGES. 

Icwa  S.  ft  L.  Am'n  v.  Heidt 35,    8S 

Ireland  v.  Giobe  Milling  Co 66,  166 

V.  Globe  M.  ft  R.  Co 5,     S6 

isham  y.  Buckingham 19,  23,  62,     64 

J 

Jacksc«i  V.  South  Omaha  Live-Stock  Exchange 127 

Jacobs  V.  Artisans'  Order  of  Mutual  Protection 110 

Jay  l&idge  Corp.  v,  "Woodman 61 

JeaD«  ▼.  Grand  Lodge,  A.  O.  U.  W 178 

Jennings  t,  Ch^sea  Division,  B.  F.  Soc 45,  48,     93 

Jerdee  v.  Cottage  Grove  Pire  Ins.  Co 2S 

Johnston  v.  Jones 184 

Jones  v.  Vance  Shoe  Co 53,  124 

Jory  V.  Sttpreme  Council,  A.  L.  of  H 170 

Juniata  B.  ft  L.  Ass'a  v.  Hetzel 112 

K 

Kahn  v.  Bank  of  St.  Joseph 70 

Kearn«y  v.  Andrews 53 

Kehlenbedk  v.  Logeman 100 

Kemp  V.  New  "fork  Produce  Exchange 109 

Kennebec  &  P.  R.  Co.  v.  Kendall 61 

Kent  V.  Quicksilver  Mining  Co 3,  11,  33,  41,  42,  74,  129,  142,  145,  152 

Killian  v.  Building  &  Loan  Ass'n 107 

Kimball  v.  Norton 119 

Kimins  v.  Boston  Five  Cent  Sav.  Bank 158 

King  V.  International  B.  L.  &  I.  Union 33 

Kingsley  v.  New  England  M.  P.  Ins.  Co 135 

Kirk  V.  Nowill 91 

Klaus,  In  re 10,  14,  66,  131 

Knight  V.  Old  Nat.  Bank 69 

Knights  Templars'  &  M.  Life  Ind.  Co.  v.  Jarman 140,  149,  157 

Knox  V.  Elden  Mnsee  American  Co 120 

Kolff  V.  St  Paul  Fuel  Exchange 5,  80,  131,  175 

Kom  V.  Mutual  Assur.  Soc 139,  145 


238  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

Krakowski  v.  North  New  York  B.  &  L.  Ass'n 129,  144 

Krecker  v.  Shirley 33 

Kummel  y.  Germania  Sav.  Bank 129 

L 

La  Marsh  v.  L'Union  St.  J.  B.  Soc 175 

Lake  v.  Minnesota  Masonic  Relief  Ass'n 143 

Lambert  v.  Addison 176 

Lane  v.  Lane Ill,  169 

Lavigneur  v.  LTJnion  Mutuelle 157 

Latham  t.  Washington  B.  &  L.  Ass'n 33 

Lawson  v.  Hewell 139,  144,  178 

Lee  V.  Citizens'  Nat.  Bank 70 

T.  Lo«isville  P.  B.  &  R.  Ass'n 79,     84 

Leggett  V.  New  Jersey  M.  &  B.  Co 4 

Lehman  v.  Clark 174 

Lesseps  v.  Architects'  Co 40,  92,  133 

Levy  V.  Grand  Lodge 178 

V.  Ord«-  of  Iron  Hall 178 

Lighthall  Mfg.  Co.,  In  re 58 

Lime  City  B.  &  L.  Ass'n  v.  Black 29,  174 

Lippitt  V.  American  Wood  Paper  Co 63 

Lloyd  V.  Supreme  Lodge,  K.  of  P 156,  187 

Lockwood  V.  Mechanics'  Nat.  Bank 11,  12,  69,     73 

Loeffler  v.   Modern  Woodmen 1397'i78 

Long  Island  R.  Co.,  In  re 91 

Loubat  V.  Le  Roy 177 

Louisyille  German  B.  &  L.  Ass'n  v.  Wissing 142,  152 

Lumbard  v,  Aldrich 186 

Lurman,  In  re 33 

Lynn  v.  Preemansburg  B.  &  L.  Ass'n 48,     87 

Lysaght  v.  St.  Louis  O.  S.  Ass'n 51,  177 

Lyttleton  v.  Blackburn 17€ 

M 
McCabe  v.  Father  Matthew  T.  A.  B.  Soc 138,  155 


TABLE  OF  CASES.  239 

REFERENCES  ARE  TO  PAGES. 

McCoy  V.  Northwestern  Mut.  Relief  Ass'n 130 

McDaniels  v.  Flower  Brook  Mfg.  Co 120 

McDonald  v.  Ross-Lewin 174 

McDonell  y.  Ontario,  S.  &  H.  R.  U.  Co 9 

McDonough  v.  Hennepin  County  Catholic  B.  &  L.  Ass'n 98 

MacDowell  v.  Ackley 139 

V.  Bank  erf  Wilmington 69 

McFadden  y.  Los  Angeles  County 86,  127 

McGannon  v.  Central  Bldg.  Ass'n 87,    88 

McKenney  v.  Diamond  State  Loan  Ass'n 17,  128 

Mackenzie  v.  Everton  &  W.  D.  Permanent  Ben.  Bldg.  Soc 139 

McLaughlin  v.  McLaughlin 26 

McMahon  v.  Supreme  Council,  O.  C.  F 178 

V.  Supreme  Tent,  K.  of  M 137,  176 

McNab  V.  Southern  Mut.  B.  &  L.  Ass'n 137 

McNeil  V.  Southern  Tier  M.  R.  Ass'n 141,  148 

V.  Tenth  Nat.  Bank 64 

McNulta  V.  Com  Belt  Bank 67,  167 

Madeira  v.  Merchants'  Exchange  Mut.  Ben.  Soc 92 

Mandel  v.  Swan  L.  &  C.  Co 127 

Manson  v.  Grand  Lodge 135 

Marcoux  v.  Society  of  Beneficence  St.  J.  B 27 

Marlborough   Mfg.   Co.  v.    Smith 62,     63 

Marsh  v.  Mathias 12 

Martin  v.  Nashville  Bldg.  Ass'n 33 

Martino  v.  Commerce  Fire  Ins.  Co 21,  160 

Masonic  Mut.  Ben.  Ass'n  v.  Severson 139,  187 

Masonic  Mut.  Life  Ass'n  v.  Jones 107 

Mast  Buggy  Co.  v.  Litchfield  F.  H.  &  I.  Co 56,  123 

Master  Stevedores'  Ass'n  v.  Walsh 84 

Mathews  v.  Associated  Press 85 

Matkin  t.  Supreme  Lodge,  K.  of  H 46,     75 

Matthews  t.  Associated  Press 44,     97 

May  V.  New  York  Safety  R.  F.  Soc 143 

Maynard  v.  Interstate  B.  &  L.  Ass'n 138 

V.  Locomotive  Engineers'  Mut.  L.  &  A,  Ins.  Ass'n 96 

Mechanics'  Bank  v.  Merchants'  Bank 69,    70 


340 


TABLrB  OF  CASES. 


RBFKRBNCES  ARE  TO  PAGES. 

Mechanics'  &  Farmers'  Bank  y.  Smith 168 

Merchants'  &  Planters'  Line  v.  Wagner 121 

Metropole  B.  &  T.  Bath  Co,  v.  Garden  City  Fan  Co 161,  165 

Metropolitan  Ace  Ass'n  v.  Froiland 27 

Metropolitan  Safety  Fund  Ace.  Ass'n  t.  Windover 15,     27 

Meurer  v.  Detroit  Musicians'  B.  &  P.  Ass'n 117 

Miller  v.  Hillsborough  Mut.  Fire  Assur.  Ass'n 160 

V.  United  States  Grand  Lodge 20,  177 

V.  Wolf 178 

Milwaukee  M.  &  B.  Ass'n  v.  Niezerowski 84 

Minneapolis  Times  Co.  v.  Nimocks 55 

Mitchell  T.  Lycoming  Mut.  Ins.  Co 129 

V.  Vermont  Copper  Mining  Co 14,  184 

Modern  Woodmen  of  America  t.  Deters 175,  182 

V.   Jameson 175 

Moerschbaecher  v.  Supreme  Council  of  R.  L 44,  138 

Montour  v.  Grand  Lodge,  A.  O.  U.  W 178 

Monumental  Permanent  B.  &  L.  Soc.  v.  Lewin 87 

Moore  v.  Bank  of  Commerce 64,  66,  13.3 

V.  Order  of  Railway  Conductors 27 

Morgan  v.  Bank  of  North  America 3,  69,  126 

Morrill  v.  Little  Falls  Mfg.  Co 55 

Morris  Canal  &  Banking  Co.  y.  Van  Vorst 120,  167 

Morris  &  E.  R.  Co.  y.  Ayres 97 

Morrison  v,  Dorsey 13 

V.  Wisconsin  O.  F.  Mut.  Life  Ins.  Co 18,  141 

Morton  Gravel  Road  Co.  y.  Wysong 10 

Moss  y.  Littleton 143 

Moyer  y.  East  Shore  Terminal  Co 21 

Moze  y.  Societe  de  Bienf aisance  St.  J.  B 112 

Mueller  y.  Madison  B.  &  L.  Ass'n 36 

Munroe  y.  Providence  Permanent  F.  R.  Ass'n 109 

Murphy  v.  Independent  Order,  S.  &  D.  of  J 175 

Mutual  A.  &  I.  Soc.  y.  Monti '  15 

Mutual  Fire  Ins.  Co.  y.  Farquhar 56,  1 03 

Mutual  Life  Ins.  Co.  v.  McSherry 122 


TABLE  OF  CASES.  24i 

EBFITBBNCKS  ARE  TO  PAGES. 

N 

Nagel  V.  Glasb'.irger S 

National  Gross  Logedes,  U.  0.  T.,  v.  Jung 28,  118 

National  Home  B.  &  L.  Ass'n,  In  re 140 

Niitional  Spraker  Bank  v.  George  C.  Treadwell  Co 163 

Neill  V.  Order  of  UiiiLed  Friends IIJ 

Ntlligan  v.  New  Yorlc  Typographical  Union  No.  6 47,  74,     »4 

Nelson  v.  Gibson $4 

Neukirch  v.  Keppler '. 175 

Nevesley  v.  Webster 33 

New  Hampshire  Sav.  Bank  v.  Do wning 16* 

New  London  &  Brazilian  Bank  v.  Brocklebank 69 

New  Orleans  Nat.  Banking  Ass'n  v.  Wiltz 71 

New  York  Protective  Ass'n  v.  McGrath 78 

New  York  &  N.  H.  R.  Co.  v.  Schuyler 64 

Newling  v.  Francis &4 

Newton  v.  Northern  Mut.  Relief  Acsn 143 

North  Milwaukee  Town  tone  Co.,  No.  21,  v.  Bis'.iop 1,     1© 

Northrop  v.  Curtis 67 

V.  Newton  &  B.  T.  Co 67 

Northwestern  B.  &  M.  Aid  Ass'n  v.  Wanner Ill,  144,  148,  145,  151 

Northwestern  Life  Assur.  Co.  v.  Erlenkoetter 15 

Northwestern  Traveling  Men's  Ass'n  v.  Schauss 174 

Nute  V.  Hamilton  Mut.  Ins.  Co 77 

o 

Oakland  Bank  v.  Wilcox 125 

Occidental  B.  &  L.  Ass'n  v.  Sullivan 88,     96 

Ocmulgee  B.  &  L.  Ass'n  v.  Thomson 88 

(yConnell  v.  Supreme  Conclave,  K.  of  D 186 

(XGrady  v.  Knights  of  Columbus 95 

Orangeville  Mut.  S.  F.  &  L.  Ass'n  v.  Young 35,  132 

Order  of  Chosen  Friends  v.  Austerlitz 24 

OBceola  Tribe,  No.  Ill,  v.  Schmidt !» 

Ostrom  V.  Greene 1*4 

Ottawa  Union  Bldg.  Soc.  v.  Scott 96.  173,  18« 

Boisot  By  Laws — 16. 


242  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGBa 

Otto  V.  Journeymen  Tailors'  P.  &  B.  Union 17S 

Oxford  Turnpike  Co.  v.  Bunnel , 67 

P 

Pain  T,  Societe  St.  Jean  Baptiste 137,  155,  156 

Palmer  v.  Yates 52 

Palmetto  Lodge  v.  Hubbell 92,  127,  172 

Parish  v.  Bankers'  Life  Ass'n 143 

Parker  t.  Bankers'  Life  Ass'n 174 

T.  Toronto  Musical  Protective  Ass'n 49,     84 

V.  United  States  B.  L.  &  L.  Ass'n 88 

Paster  v,  Negelsmith. 174 

Paton  V.  Newman 127 

Patrons'  Mut.  Aid  See.  v.  Hall 118 

Pawlick  V.  Homestead  Loan  Ass'n • 13$ 

Payn  v.  Rochester  M.  R.  Soc 24 

Peatman  t.  Centarville  L.  H.  &  P.  Co 101,  165 

Peebles,  In  re. 71 

Pellazzino  T.  German  Catholic  St.  J.  Soc 140,  150,  152,  153 

Penachio  v.  Saati  Society 157 

Pendergast  v.  Bank  of  Stockton 69 

Pentz  V.  Citiz«is'  Fire  Ins.  Co 173 

People  T.  Alpha  Lodge,  No.  1 177 

y,  American  Institute 121.  136 

V.  Board  of  Fire  Underwriters m 

V.  Board  of  Trade 42,  176 

V.  Bumham  Hospital   4,     47 

V.  Chicago  Board  of  Trade 5,  43,  49,     81 

T.  Chicago  Live  Stock  Exchange 84 

V.  Crockett    7© 

V.  Crossiey    1^ 

V.  G-rand  Lodge,  A.  O.  U.  W 13^ 

T.  Green-wood  Lake  Ass'n 56,  177 

T.  Hohok^a  Turtle  Club 55 

T.  Kip 60 

T.  Medmnies'  Aid  Soc m 


TABLE  OF  CASES.  243 
REFEllKNCES  ARE  TO  PAGES. 

People  V.  Medical  Soc 4,  7> 

V.  Musical  Mut.  Protective  Union 17J 

V.  New  York  Benev.  Soc 83,  87,  91,  174 

V.  New  York  Commercial  Ass'n 81,  93 

V.  New  York  Cotton  Exchange 82 

V.  New  York  Produce  Exchange 82,  181 

Y.  Phillips 60 

V,  Sailors'  Snug  Harbor 44,  77 

T.  St.  Franciscus  Ben.  Soc 75,  131 

V.  St.  George's  Soc 96,  177 

V.  Sterling  B.  C.  Mfg.  Co 11,  129 

V.  Throop 4,  33,  41,  42,  97 

V.  "Women's  Catholic  Order  of  Foresters 2,  51,  178,  180 

V.  Young  Men's  Father  Matthew  T,  A.  B.  Soc,  No.  1 

5,  6,  36,  41,  50,  51,  75 

People's  B.  &  L.  Ass'n  v.  Billing 112 

People's  B.,  L.  &  S.  Ass'n  v.  Tinsley 127 

People's  Home  Sav.  Bank  v.  Superior  Court 49,  58 

People's  Sav.  Bank  v.  Cupps *. 116,  168 

Pepe  V.  City  &  Suburban  P.  B.  Soc 138,  151,  153 

Perkin  v.  Cutlers'  Co 11 

Perry  v.  Council  Bluffs  City  Waterworks  Co 163 

Pf eiffer  v.  Landburg  Brake  Co 101 

V.  Weishaupt 178 

Pfister  V.  Gerwig 13,  129 

Phillips  V.  Wickham 58 

Pioneer  S.  &  L.  Co.  v.  Brockett 138 

V.  Miller 138 

Piper  V.  Chappell 90 

Piquenord  v.  Libby 29,  118 

Planters'  &  Merchants'  Mut.  Ins.  Co.  v.  Selma  Sav.  Bank 65 

Plumb  V.  Bank  of  Enterprise 138 

Pokrefky  v.  Detroit  Firemen's  Fund  Ass'n 140,  144,  150 

Polish   R.  G.  Union  v.  Warczak 128 

Poulters'  Co.  v.  Phillips 99 

Poultney  v.  Bachman 138,  144.  155 

Powers  V.  Budy 1S3 


244  TABLE  OF  CASES. 

RBPBRBNCES  ARE  TO  PAGKa 

Presbyterian  Assur.  Fund  ▼.  Allen 3S 

Priest  V.  Citizens'  Mut.  Fire  Ins.  Co 26 

Prote<*ion  Life  Ins.  Co.  v.  Palmer 106 

Pulford  V.  Fire  Department 33 

Q 

Queen  v.  Saddlers'  Co 100 

Quinlan  y.  St.  Francis  Xavier  Mut.  Ben.  Sec 177 

R 

Raggett  V.  Bishop 129 

Railway  B.  &  P.  Co.  v.  Lincoln  Nat.  Bank 187 

Railway  P.  &  F,  C.  Mut.  Aid  &  Ben.  Ass'n  v.  Leonard 174 

Ranger  v.  Champion  C.  P.  Co 78 

Rathbun  v.  Snow 163 

Raub  V.  Masonic  Mut.  Relief  Ass'n 76 

Raymond  v.  Farmers'  Mut.  Fire  Ins.  Co 176 

Reading  Fire  Ins.  &  T.  Co.  v.  Reading  Iron  Works 69 

Reed  v.  Copeland 64,     65 

Reg,  V.  Darlington  Free  Grammar  School  Governors 38 

V.    EJdmonds 37 

V.   Saddlers'  Co 96 

Reid  V.  Eatonton  Mfg.  Co 76 

Revere  y.  Boston  Copper  Co 150 

Rex  V.  Ashwell 16,  41 

V.  Bumstead 40 

V.  College  of  Physicians 168 

V.  Coopers'  Company 85 

V.  Cutbush 38 

Y.  Free  F.  &  D.  of  Faversham 46,  98 

V.  Fishermen  of  Faversham 80 

v.  Toppenden    ; . .  38 

Y.  Westwood 4,  10 

Reynolds  y.  Georgia  State  B.  &  L.  Ass'n 132 

Rhule  Y.  Diamond  Colliery  Accidental  Fund 174 

Richardson  v.  Fremantle 176 


TABLE  OF  CASES.  245 

REFERENCES  ARE  TO  PAGES. 

Richardson  v.  Union  Congregational  Soc 2.  13,     16 

Richmondville  Mfg.  Co.  v.  Prall 23 

Roberts  v.  American  B.  &  L.  Ass'n 45,     88 

V.  Grand  Lodge,  A.  O.  U.  W 139 

Robillard  v.  Societe  St.  J.  B.  de  C 113 

Robinson  v.  National  Bank  of  New  Berne 19,  23,     65 

V.  Templar  Lodge,  No.  17 45,  139 

V.  Yates  City  Lodge 42,  100 

Rood  V.  Railway  P.  &  F.  C.  Mut.  Ben.  Ass'n 174 

Rorke  v.  San  Francisco  S.  &  E.  B 176 

Rosenback  v.  Salt  Springs  Nat.  Bank 7S 

Rosenberg  v.  Northumberland  Bldg.  Soc 135 

Roxbury  Lodge,  No.  184,  v.  Hocking 176.  177 

Rubino  v.  Fraterna  Ass'n 45,  48.     93 

Russell  V.  North  American  Ben.  Ass'n 46,  17< 

Ryan  v.  Cudahy 181 

V.  Lamson   176 

s 

St.  Louis,  A.  &  S.  R.  Co.  V.  Crews 58 

St.  Louis  Perpetual  Ins.  Co.  v.  Goodfellow 69 

St.  Luke's  Church  v.  Mathews 38.     41 

St.  Mary's  Ben.  Soc.  v.  Burford 44,     77 

St.  Patrick's  Male  Beneficial  Soc.  v.  McVey 140 

Sabin  v.  Phinney Ill,  169 

V.  Senate  of  National  Union 143 

Sampson  v.  Bowdoinham  Steam  Mill  Corp 54 

Samuel  v.  Holladay 19.  118,  160 

Samuels  v.  Holliday 19,  118,  160 

San  Buenaventura  Mfg.  Co.  v.  Vassault 12i 

Sargent  v.  Essex  Marine  Ry.  Co 64,  133 

V.  Franklin  Ins.  Co 64,  133 

Sassenscheidt  v.  Fresco  Painters'  Ben.  Union 12^ 

Savage  v.  People's  B.  L.  &  S.  Ass'n 141,  isj 

Savings  Bank  of  Hannibal  v.  Hunt 5j 

Sayre  v.  Louisville  Union  Benev.  Ass'n 84 

Scanlan  v.  Snow 15,  57,  183 


246  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

Schafer  v.  United  Brotherhood  of  Carpenters 105 

SchifE  V.  Supreme  Lodge,  0.  M.  P 177 

Schmidt  v.  German  Mut.  Ins.  Co 105 

y.  Supreme  Tent,  K.  of  M 46,  62,  75,  139,  174 

Scholl  V.  Sadoury 97 

Schrick  v.  St.  Louis  Mut.  House  Bldg.  Co 140 

Schultz  V.  Citizens'  Mut.  Life  Ins.  Co 9 

Screwmen's  Ben.  Ass'n  v.  Benson 179 

Scrivners'  Company  v.  Brooking 48,     52 

Second  Nat.  Bank  v.  National  State  Bank 73 

Seeligsen  v.   Brown 65 

Seneca  County  Bank  v.  Lamb 34 

Sexton  V.  Commercial  Exchange 83 

Shackelford  v.  Supreme  Conclave,  K.  of  D 42 

Sherry  v.  Operative  Plasterers'  Mut.  Union 40 

Siebe  v.  Joshua  Hendy  Machine  Works 53,  101 

Sieverts  v.  National  Benev.  Ass'n 141,  144 

Simek  v.  Lodge  No.  86 87,     91 

Simeral  v.  Dubuque  Mut.  Fire  Ins.  Co 129 

Simmons  v.  Syracuse  B.  &  N.  Y.  &  O.  Benev.  Soc 177 

SintefC  v.  People's  B.,  L.  &  S.  Ass'n 140,  146 

Skandinaviska,  In  re 2 

Skelly  v.  Private  Coachmen's  B.  &  C.  Soc 93,  131,  132 

SleB  V.  Bloom 74,  167 

Smith  V.  Dorn 56,  118,  123 

T.  Galloway 139,  153 

T.  Harman 2ii 

T.  Law 43,     59 

T.  Martin  Anti-Fire  Car  Heater  Co 119,  125,  163 

T.  People's  Mut.  Ben.  Soc 2« 

T.  Pinney  127 

T.  Reynolds 44,  162 

▼.  Smith 125.  165 

T.  Southern  B.  &  L.  Ass'n 36 

T.  Supreme  Lodge,  K.  of  P 141,  147 

Society  for  Visitation  of  Sick  v.  Commonwealth 175 

Sofge  V.  Supreme  Lodge,  K.  of  H Ill,  i6$ 


TABLE  OF  CASES.  247 

REFERENCES  ARE  TO  PAGES. 

Sovereign  Camp,  Woodmen  of  the  World,  v.  Fraley 130 

Spencer  v.  Grand  Lodge,  A,  O.  U.  W 140,  148 

Sperry  v.  Dransfleld 19,  117 

Spilman  v.  Supreme  Council,  H.  C 175 

Spurlock  V.  Pacific  Railroad 69 

Stafford  v.  Produce  Exchange  Banking  Co 9,     69 

Starling  v.  Supreme  Council,  R.  T.  of  T 142 

State  V.  Associated  Press 86 

V.  Atherton 120,  167 

V.  Bank  of  Louisiana 4,  33,  41,     97 

V.  Castle  Excelsior  No.  1 178 

V.  Cincinnati  C.  of  C,  &  M.  Exchange 20,  177 

Y.  Citizens'  Bank  of  Jennings 3Q 

V.  Conklin 97,     98 

V.  Curtis /.  .12,  59,  98,  131 

V.  Ferguson 5 

V.  Grand  Lodge,  A.  0.  U.  W 139 

V.  Mclver  63 

T.  Manhattan  Rubber  Mfg.  Co 103 

V.  Merchants'  Exchange 48,    82 

V.  Milwaukee  Chamber  of  Commerce 44,     86 

V.  New  Orleans  &  C.  R.  Co 63,  134 

V.  Overton 97,  126 

V.  Pettineli 125 

V.  Sibley 22 

y.  Silva 8 

V.  Tudor 36,     .5« 

v.  Union  Merchants'  Exchange 49 

State  Savings  Ass'n  v.  Nixon- Jones  Printing  Co 10,  11,  166 

Steamship  Dock  Co.  v.  Heron 72,  167 

Stebbins  v.  Phoenix  EMre  Ins.  Co 66 

Steiner  v.  Steiner  L.  &  L.  Co 62 

Steove  V.  Grand  Lodge,  A.  O.  U.  W 130 

Stevens  v.  Davison 16 

Stewart  v.  Lee  Mut.  Fire  Ins.  Ass  n 7g 

V.  Walla  Walla  P.  &  P.  Co J3,     64 

Stilwell  V.  People's  B.,  L.  ft  S.  As-s'n 138,  143,  145 


248  TABLE  OF  CASES. 

RBFBRBNCES  ARE  TO  PAGES. 

Stockton  V.  Harmon 17 

Stockwell  V.  St.  Louis  Mercantile  Co 62,  116 

Stoehlke  v.  Hahn 20 

Stohr  V.  San  Francisco  M.  F.  Soc 140.  144,  145,  155,  157 

Strasser  v.  Staats 17§ 

Strauss  v.  Mutual  R.  F.  Life  Ass'n 142,  143 

Sullivaa  v.  Lewiston  Inst,  of  Savings 153 

V.  Spaniol 34 

Supreme  Commandery  v.  Ainsworth 4.  138,  143,  150,  151 

Supreme  Council  v.  Garrigus 135 

Supreme  Council,  A.  L.  of  H.,  v.  Adams 139,  169 

Supreme  Council,  C.  B.  L.,  v.  Boyle 113 

Supreme  Council,  C.  K.  of  A.,  t.  Morrison 169 

Supreme  Council,  R.  A.,  v.  Brashears 143 

Supreme  Lodge,  K.  of  H.,  v.  Dalberg 93,  104,  117 

Supreme  Lodge,  K.  of  P.,  v.  Clarke 77 

V.  Knight   2.  96,  137,  143,  144.  151,  152 

V.  Kutscher 2,  12,  128,  138 

V.  La  Malta 138 

T.  McLennan  128 

V.  Trebbe  2 

Supreme  Lodge  National  Reserve  Ass'n  v.  Mondrowski 9C 

Supreme  Lodge,  O.  S.  F.,  v.  Dey 179 

Supreme  Tent,  K.  of  M.,  v.  Hammers 138,  169 

V.  King 113 

V.  Volkert 17 

Supreme  Tribe  of  Ben  Hur  v.  Hall 28 

Susquehanna  Ins.  Co.  v.  Perrine 129 

Susquehanna  Mnt.  Fire  Ins.  Co.  v.  Elkins ]8 

Swain  v.  Grand  Lodge,  A.  O.  U.  W 140 

Swaine  v.  Miller 177 

Swedish  Christian  Mission  Soc.  v.  Lawrence 17 


Taylor  v.  Edson 139 

V.  Griswold  4.  5.  54,     58 

Tempel  v.  Dodge 52 


TABLE  OF  CASE5S.  249 

REFKRENCES  ARE  TO  PAGES. 

Ten  Broek  t.  Winn  Boiler  Compound  Co 120,  166 

Tete  V.  Farmers'  &  Mechanics'  Banli 69,  127,  175 

Thayer  v.  Herrick 10 

Theobald  v.  Supreme  Lodge,  K.  of  P 77 

Thibeault  v.  St.  Jean  Baptist  Ass'n 113 

Thibert  v.  Supreme  Lodge,  K.  of  H 112.  146,  147 

Thomas  v.  Cochran 108 

Y,  Musical  Mut.  Protective  Union 79,  83,  126,  131,  173,  178 

V.  Societa  Italiani  di  Mutno  Soccorso 98 

T.  Thomas  Ill 

Tourville  v.  Brotherhood  of  L.  F 92 

Travers  v.  Abbey 175 

Trawick  v.  Peoria  &  Ft.  C.  St.  Ry.  Co 21.  16:j 

Treadway  v.  Hamilton  Mut.  Ins.  Co 129 

Trowbridge  v.  Hamilton 33 

Trustees  v.   Flint 76 

Tuttle  V.  Walton C9,  70,  126,  127 

Twelfth  St.  Market  Co.  v.  Jackson 52,  99 

Tyler  v.  Old  Post  Bldg,  Ass'n. .  .^ 126 

u 

Underbill  v.  Agawam  Mut.  Fire  Ins.  Co 85 

V.  Santa  Barbara  Land,  Bldg.  &  Imp.  Co 17 

Union  Bank  v.  Ridgely 9,  187 

Union  Mut.  Fire  Ins.  Co.  v.  Keyser 18.  25.  130 

Union  Nat.  Bank  v.  Scott 58 

United  Fire  Ass'n  v.  Benseman 10 

United  States  v.  Metropolitan  Club 186 

United  States  Mut.  Ace.  Ass'n  v.  Mueller 105 

United  States  S.  &  L.  Co.  v.  Shain 132 

V 

Van  Poucke  v.  Netherland  St.  V.  P.  Soc 46.  143,  176 

Vansands  v.  Middlesex  County  Bank 62 

Vercoutere  v.  Golden  State  Land  Co 12 

Victor  G.  Bloede  Co,  t.  BJoede 48.     66 


250  TABLE  OF  CASES. 

REFERENCES  ARE  TO  PAGES. 

Vierllng  v.  Mechanics'  &  Traders'  S.,  L.  &  B.  A  s  u 43,  87.     89 

Vintners"  Co.  v.  Passey 43,  90,     96 

Voluntary  Relief  Dept.  v.  Spencer 177 

w 

Wachtel  t.  Noah  W.  &  O.  Benev.  Soc 62,  117,  177 

Wait   V.    Smith 134,  169 

Wall  V.  Emigrant  Industrial  Sav.  Bank 12# 

Wallace  v.  Madden 3-5,  111 

Wain's  Assignees  v.  Bank  of  North  America 69 

Walsh  V.  Consumnes  Tribe,  No.  14,  I.  O.  R.  M 112 

Ward  V.  Johnson 160 

Warner  v.  Mower 60 

Warren  v.  Louisville  Leaf  Tobacco  Exchange 50,     82 

Waterman  v.  Chicago  &  L  R.  Co 123 

Waterworth  v.  American  Order  of  Druids 10^ 

Watson  V.  Bendigo  Permanent  Land  &  Bldg.  Soc 19 

V.  Sidney  F.  Woody  Printing  Co 1(> 

Watts  V.  Equitable  Mut.  Life  Ass'n 20 

Weakly  v.  Northwestern  Benev.  &  Mut.  Aid  Ass'n 179 

Weatherly  v.  Medical  &  Surgical  Soc 3^     41 

Welling  V.  Eastern  B.  &  L.  Ass'n 13^ 

Wells  V.  Black 35 

Wetherell  v.  Thirty-First  St.  B.  &  L.  Ass'n 71 

Wheeler  v.  Lackawanna  Coal  Co 175 

V.  Supreme  S.  O.  of  I.  N 141 

White  V.  Brownell 17g 

V.  Interstate  B.  &  L.  Ass'n 122 

Wiberg  v.  Minnesota  Scandinavian  Relief  Ass'n 17^     20 

Wicks  V.  Monihan 92 

Wierman  v.  International  B.,  L.  &  I.  Union 6,  34,     4j 

Wiggin  V.  Freewill  Baptist  Church j  g^ 

v.  Knights  of  Pythias 9g 

Williamson  v.  Eastern  B.  &  L.  Ass'n 130 

"Willison  v.  Jewelers'  &  Tradesmen's  Co T  29 

Wilson  V.   Bryce IO7 

V.  Miles  Platting  Bldg.  Soc 138 


TABLE  OF  CASES.  251 

RBFBBBNCBS  ARE  TO  PAGRS. 

Wilson  V.  St.  Louis  &  S.  F.  Ry.  Co 64,  133 

Wist  V.  Grand  Lodge,  A.  0.  U.  W 140.  143,  144,  147,  152 

Wolf  V.  District  Grand  Lodge  No.  G 35 

Women's  C.  O.  F.  v.  Condon 186 

V.  Haley  179 

V.  People   51 

Wood  V.  Lost  Lake  &  C.  Mfg.  Co • 101 

T.  What  Cheer  Lodge 178 

Worcester  v.  Essex  Merrimac  Bndgo  Corp 159 

Wright  V.  Supreme  Commandery,  G.  R 186 

Y 

Toxmg  V.  Vough 69,     73 

Z 

Zenith  B.  &  L.  Ass'n  v.  Heimbach 35 

Zimmerman  t.  Masonic  Aid  Ass'n Ig7 


INDEX 


tt   REFERENCES  ARE  TO  SECTIONS. 


A 


ADOPTION   OF  BY-LAWS, 


generally,  9,  11,  12. 

by  whom  made,  11. 

informalities  in,  when  disregarded,  12,  15. 

before  organization,  invalid,  13. 

by  quorum  of  directors.  14. 

outside  of  state,  16. 

AMENDMENT  OP  BY-LAWS, 

power  to  amend,  17. 

requirements  of  meeting  for,  51. 

as  affecting  members'  contract  rights,  118-131. 

APPROPRIATENESS, 

by-laws  must  be  appropriate,  44. 
illustrations  of,  45. 

ASSENT, 

does  not  validate  illegal  by-law,  112. 

ASSESSMENTS   AND   DUES, 

regulation  by  by-laws,  54. 

must  be  reasonable,  54,  55. 

when  may  be  made  by  committee,  55. 

construction  of  by-laws  relating  to,  93. 


254  INDEX. 

RBFBRBNCE^S  ARE  TO  SECTIONS. 

B 

BANKS, 

cannot  by  by-law  allow  usury,  S4. 
by-law  giving  lien  on  stock,  65. 
liable  for  violation  of  by-laws,  97,  100. 

BONDS, 

by-law  may  require  officers  to  give,  48. 

BUILDING  AND  LOAN  ASSOCIATIONS, 

cannot  pass  by-laws  authorizing  usuir,  34,  35. 
by-laws  providing  for  paid-up  stock,  36. 

allowing  onautborized  transactions,  3S. 

providing  for  forfeiture  of  stock,  36. 

instances  of  reasonable,  42. 

instances  of  unreasonable,  43. 

impo^ng  fines,  80-82. 

relating  to  loans,  95. 

printed  in  pass-book,  109. 

effect  of  changes  in,  118-131. 
scope  of  secretary's  bond,  107. 

BY-LAWS, 

nature  of,  1-8. 

definition  of,  1. 

distinguished  from  ordinances,   2 

from  resolutions,  4. 

frOTn  regulations,  5. 

from  custom,  9. 
need  of  being  in  writing,  4,  9,  Ifl. 

under  seal,  4,  10. 
power  to  adopt,  S. 
scope  of,  7.  8. 
must  be  general,  7. 
function  of,  8. 
form,  9,  10. 


INDEX.  255 

RBFRRENCES  ARE  TO  SECTIONS. 


BY-LAWS— Cont. 


should  be  clear  and  concise,  10. 
adoption  of,  11,  12,  14-16. 
ratification  of,  13. 
amendment  of,  17,  118-131. 
repeal  of,  18,  19. 
waiver  of,  20-29,  98. 
subject-matter  of,  30-86. 
must  conform  to  law,  34-37. 
instances  of  violations  of  statute,  35. 
contravention  of  law  ground  of  ouster,  36. 
may  create  new  rights  and  liabilities,  36. 
may  extend  statutory  rights,  37. 
must  conform  to  charter,  38,  39. 
must  be  reasonable,  40,  41. 
illustrations  of  reasonable  by-laws,  42. 
iliustratlons  erf  unreasonable  by-laws,  43. 
must  be  appropriate,  44,  45. 
regulating   duties   of   officers,    4^-48. 

meetings  and  elections,  49-53. 

assessments  and  dues,  54,  55. 

transfer  of  stock,  56-60. 
creating  lien  on  stock,  61-65. 
retiring  or  forfeiting  stock,  66. 
creating  preferred  stock,  67. 
affecting  rights  of  members,  68-71. 
regulating  private  affairs  of  members,  72-7S. 
in  restraint  of  trade,  76-78. 
creating  penalties,  79-86. 
construction  of,  87-95. 
effect  of,  on  the  corporation,  96-102. 

directors,  103-105. 

officers,  106-107. 

stockholders  or  members,  108-131. 

third  persons,  132-146. 
▼tolation  of,  effect.  101,  102,  114,  115. 

by  directors,  104. 


256  INDEX. 

REFERENCES  ARE  TO  SECTIONS. 
BY-LAWS— Cont. 

by  oflBcers,  107. 
as  part  of  contract  of  membership,  121. 
when  binding  on  strangers,  132-146. 
enforcement  of,  147-153, 
necessity  of,  154-157. 
proof  of,  9,  158,  159. 


CHARTER, 

by-laws  must  conform  to,  38,  39. 
exception  where  charter  is  illegal,  39. 

CHURCH  SOCIETY, 

by-laws  of,  must  conform  to  law.  34. 

COMMITTEE, 

right  to  empower  by  by-law,  46.  47. 

CONSTITUTION   OF   SOCIETY, 

is  in  effect  a  by-law,  1. 

cannot  take  away  right  to  pass  by-laws,  1. 

does  not  repeal  existing  by-laws,  19. 

CONSTITUTION  OF  STATE, 

by-laws  must  conform  to,  34. 
provisions  of,  as  to  stock  voting,  35. 

as  to  stock  liability,  35. 

As  to  inspection  of  books,  35. 

CONSTRUCTION  OF  BY-LAWS, 

in  general,   87-95. 

statutory  rules  of  construction  applicable,  87. 

practical  construction,  88 

question  of  law  or  fact,  88. 

partial  invalidity,  89. 


INDEX.  257 


REFERENCES  ARE  TO  SECTIONS. 
CONSTRUCTION  OF  BY-LAWS— Cont 

particular  by-laws  construed,  90. 

by-laws  relating  to  ofBcers  and  agents,  91. 

meetings  and  elections,  92. 

dues  and  assessments,  93. 

designation  of  beneficiary,  94, 

benefits  and  loans,  95. 

CONTRACT  RIGHTS, 

how  affected  by  by-laws,  118-13L 

CORPORATE  MEETINGS, 
see  "Meetings." 

CORPORATE  SEAL 
by-laws  under,  4,  10. 

CORPORATIONS, 

how  affected  by  by-laws,  3,  96-102. 
power  to  adopt  by-laws,  6. 

CREDITORS, 

how  affected  by  by-laws,  142. 

CUSTOM, 

distinguished  from  by-law,  9. 

may  be  evidence  of  by-law,  9,  13. 

may  take  the  place  of  by-law.  117,  154. 


D 


DIRECTORS, 

power  to  pass  by-laws,  11,  12. 

amend  by-laws,  17. 

waive  by-laws,  103. 
how  affected  by  by-laws,  103-106. 
by-laws  regulating  powers  of,  48,  58, 
violation  of  by-laws  by,  104. 
Boisot  By  Laws — 17. 


258  INDEX. 

REFERENCES  ARE  TO  SECTIONS. 
DISFRANCHISEMENT, 

regulation  of,  by  by-laws,  85,  86,  151-153. 

DUES  OF  MEMBERS, 

see  "Assessments  and  Dues." 


£ 


ECCLESIASTICAL  CONTROL, 

cannot  be  given  by  by-laws,  45,  46. 

EFFECT  OF  BY-LAWS, 

on  the  corporation,  3,  96-102. 
directors,  103-105, 
officers,  106,  107. 

stockholders  or  members,  3,  108-131, 
third  persons,  132-146. 

ELECTIONS, 

regulation  of,  by  by-laws,  49,  53. 

votes  and  proxies,  52. 

in  violation  of  by-laws,  104,  107. 

EMPLOYES  OF  CORPORATIONS, 
hiring  of,  contrary  to  by-laws,  23. 

ENFORCEMENT  OF  BY-LAWS, 

in  general,  147-153. 

right  to  provide  penalties,  147. 

recovery  of  penalties,  148. 

double  punishment,  149. 

self-executing  by-laws,  150. 

interference  with,  by  the  courts,  151 153. 

ESTOPPEL, 

to  deny  validity  of  by-laws,  110,  112. 
to  set  up  by-law  against  contract,  100. 


INDEX.  259 

REFERENCES  ARE  TO  SECTIONS. 


BVIDENCK, 

see  "Proof  of  By-Laws." 

EXPULSION, 

regulation  of,  by  by-laws,  85,  86,  151-153. 


FINES. 

when  may  be  imposed  by  by-law,  83. 

must  be  reasonable,  41,  80-82. 

by-law  may  impose  smaller  ones  than  charter,  39. 

collection  of,  83,  147,  148. 

FORFEITURE, 

created  by  by-laws,  39,  66,  84. 


INSOLVENCY, 

effect  on  by-laws,  8. 

INSURANCE  COMPANIES, 

see  "Mutual  Benefit  Societies;"  "Mutual  Plre  Insurance." 


LIEN  ON  STOCK, 

creation  of,  by  by-laws,  61,  62. 

scope  of,  63. 

waiver  of,  24. 

New  York  rule  as  to,  64. 

banking  corporations,  65. 

LOBBYING, 

by-law  providing  fund  for.  Illegal,  45. 


260  INDEX. 

REFERENCES  ARE  TO  SECTIONS. 

M 

MEETINGS, 

regulation  of,  by  by-law,  37,  49-51,  53. 
construction  of  by-laws  relating  to,  92. 
in  violation  of  by-laws,  104,  107. 
conduct  of,  116. 

MEMBERS, 

how  affected  by  by-laws,  3,  68,  71,  108-131. 

private  affairs  of,  72-74. 

restriction  on  right  to  sue,  70. 

how  affected  by  change  in  by-laws,  17,  118-131. 

suspension  ol,  by  by-law,  69. 

expulsion  of,  by  by-law,  85,  86,  151-153. 

requiring  arbitration  between,  75. 

cannot  comrlain  of  by-law  unless  injured,  112. 

MUTUAL  BENEFIT  SOCIETIES, 

by-laws  of,  are  often  obscure,  10. 

when  member  of,  cannot  question  by-laws,.  15. 

waiver  of  by-law  of,  22,  25-29. 

by-law  forbidding  designation  of  beneficiary  by  win,  35. 

limiting  beneficiaries,  35. 
cannot  extend  beneficiaries  beyond  charter  limitations,    39. 
instances  of  reasonable  by-laws  of,  42. 

of  unreasonable  by-laws  of,  43. 
by-laws  providing  penalty  for  nonpayment,  55. 
assignment  of  policy,  58. 

by-law  cannot  give  larger  benefits  than  the  charter,  67. 
suspending  members  on  account  of  occtipati<Mi,  68. 
by-'aw  of,  cannot  abridge  charter  rights,  69. 
by-law  of,  limiting  rights  and  restricting  suits,  70. 
regulating  conduct  of  members,  70. 
forbidding  member  to  enlist  in  army,  75. 
penalty  for  not  paying  assessment.  84,  86. 
construction  of  by-laws  of,  87,  93,  94. 


INDEX.  261 

REFERENCES  ARE  TO  SECTIONS. 
MUTUAL  BENEFIT  SOCIETIES— Cont 

ducL;  and  assessments,  93. 

designation  of  beneficiary,  94. 

benefits  and  loans,  95. 

powers  ipven  by  by-laws  to  the  directors  cannot  be'  delegated  by 

them,  105. 
by-laws  of  supreme  and  subordinate  bodies,  109. 
conflict  between  by-laws  and  certificate,  IIL. 
right  of  member  to  sue,  115. 
effect  of  changes  in  by-laws,  118-131. 
by-laws  as  part  of  membership  contract,  121. 

distinction  between  membership  rights  and  insuraztce  riglAB,  12S. 
beneficiary  bound  by  by-laws,  145. 

MUTUAL  FIRE  INSURANCE, 

waiver  of  by-law  by  issuance  of  policy,  20. 
by  settlement  of  loss,  25. 
In  general,  27. 

N 

NATIONAL  BANKS, 

by-law  of,  cannot  create  lien  on  stock,  65. 

NECESSITY  OP  BY-LAW3. 
in  general,  154157. 

NOTICE, 

by-laws  relating  to,  50,  51. 
construction  of  by-laws  relating  to,  92. 
of  amendment,  17. 
of  meeting  must  Cimform  to  by-laws,  37. 

o 

OFFICERS, 

by-laws  regulating  duties  of,  46-48. 


262  INDEX. 

REFERENCES  ARE  TO  SECTIONS. 
OFFICERS— Cont. 

how  affected  by  by-laws,  106,  107. 
construction  of  by-laws  affecting,  91. 
employment  of,  in  violation  of  by-.aws,  23. 
by-law  defining  eligibility  of,  39. 

ORDINANCES, 

distinguished  from  by-laws,  2. 


PENALTIES, 

created  by  by-laws,  79. 

must  be  reasonable,  80. 

enforcement  of,  83,  147-153. 

forfeiture,  39,  66,  84. 

fine,  80-83. 

expulsion,  85,  86,  151-153. 

suspension,  69. 

strict  construction,  87. 

governed  by  by-laws,  97. 

PLEADING, 

how  adoption  of  by-law  pleaded,  14. 

PLEDGE  OF  STOCK, 

effect  of  by-law  on  pledgee.  141. 

PREFERRED  STOCK, 

creation  of,  by  by-law,  67. 

KIOOF  OF  BY-LAWS. 

need  not  be  in  writing:,  9. 
necessity  of  proof.  i  L6. 
mode  of  proof,  15  J. 

PROXY, 

voting  by,  52. 


INDEX.  263 


REFERENCES  ARE  TO  SECTIONS. 

Q 

QUORUM, 

power  of,  to  pass  by-laws,  14. 

to  amend  by-laws,  18. 
definition  of,  by  by-laws,  48,  53. 

R 

RATIFICATION, 

of  by-laws  by  usage,  13. 

by  acquiescence,  15,  16. 

REASONABLENESS, 

by-laws  must  be  reasonable,  40. 
what  are  reasonable  by-laws,  40-42. 

unreasonable  by-laws,  43. 
reasonable  penalties,  80. 
question  of  law,  88. 

REGULATIONS, 

distinguished  from  by-laws,  5. 

REPEAL  OF  BY-LAWS, 

power  to  repeal,  18. 
implied  repeal,  19. 

RESOLUTIONS, 

distinguished  from  by-laws,  4. 

RESTRAINT  OF  TRADE, 

renders  by-laws  invalid,  76,  77. 
what  is  not,  78. 


SALARIES, 

provisions  of  by-laws  as  to,  48. 


264  INDEX. 

REFERENCES  ARE  TO  SBCTlONa. 
SCOPE  OF  BY-LAWS. 

in  general,  7,  8. 

SEAL, 

by-laws  under  corporate  seal,  4,  10. 

SLANDER, 

by-law  forbidding,  45. 

STOCK, 

regulation  of  its  transfer,  56-58,  60. 

waiver  of  by-laws  relating  to,  21,  22,  24. 

cannot  be  forfeited  without  sale,  35. 

restriction  on  its  transfer,  59. 

lien  on,  for  debt  to  corporation,  61-65. 

retirement  of,  66. 

issue  of  preferred,  67. 

STOCKHOLDERS, 

power  to  pass  by-laws,  11,  12. 
how  affected  by  by-laws,  108-131. 
see  "Members." 

STOCKHOLDERS'  MEETINGS. 

regulation  by  by-iawS;  37. 
see  "Meetings." 

STRANGERS,  / 

how  affected  by  by-laws,  132-146. 

SUBJECT-MATTER  OF  BY-LAWS, 
general  principles,  30-45. 
conformity  to  law,  34-37. 
agreement  with  charter,  38,  39. 
reasonableness,  40-43. 
appropriateness,  44-45. 
regulation  of  particular  subjects,  46-85. 


INDEX.  265 


REFERENCES  ARE  TO  SBCTIONSk 
SUBJEX3T-MATTER  OF  BY-LAWS— Cont. 

duties  of  officers,  46-48. 
meetings  and  elections,  49-53. 
assessments  and  dues,  54,  55. 
transfer  of  stock.  56-60. 
creating  lien  on  stock,  61-6S. 
retiring  stock,  66. 
creating  preferred  stock,  67. 
rights  of  members,  68-71. 
private  affairs  of  members,  72-75. 
restraint  of  trade,  76-78. 
penalties,  79-86. 

SUITS, 

regulation  of,  by  by-laws,  70. 

SUNDAY, 

by-laws  forbiddlns  business  on   45. 


THIRD  PERSONS. 

how  affected  by  by-laws  132-146. 

TRANSFER  OF  STOCK, 

regulation  of,  by  by-laws.  56,  60. 
irregular  transfers,  57,  58. 
restriction  of,  59. 
failure  to  jwovide  for,  117. 
contrary  to  by-law,  141. 


u 


UNINCORPORATED  SOCIETIES, 
by-laws  of,  40. 

USAGE, 

see  "Custom." 


266     .  INDEX. 

REFERENCES  ARE  TO  SECTlONg. 

trsuRY, 

cannot  be  authorized  by  by-laws,  34, 


VACANCIES, 

by-laws  may  provide  for  filling,  48. 

VALIDITY, 

of  by-law  question  of  law.  88. 
by-law  invalid  in  part,  89. 

VESTED  RIGHTS, 

how  affected  by  changes  In  by-laws,  128-130. 

VOLUNTARY  UNINCORPORATED  SOCIETIES, 
by-laws  of,  40, 

VOTING, 

by-laws  regulating,  52,  53. 
see  "Elections." 

w 

WAIVER  OF  BY-LAWS, 
in  general,  20-29. 
provision  in  by-law  against,  20. 
as  to  transfer  of  stock,  21,  22. 

notice  of  directors'  meeting,  21. 

admission  of  members,  25. 

powers  of  corporation,  24. 
mutual  benefit  insurance,  26-28. 
by  officers  of  corporation,  25. 
by  member,  25. 
relating  to  term  of  office,  23. 
creating  a  lien  on  stock,  24. 
corporation  bound  by,  98,  99. 
when  directors  may  waive  by-laws,  103. 


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